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STRENGTHEN Publication Series
A study on skills for trade and economic diversification (STED) in the non-traditional coconut export sectors of the Philippines
Rolando T. Bello, Blanquita R. Pantoja, Maria Francesca O. Tan, Roxanne A. Banalo, Joanne V. Alvarez and Florita P. Rañeses
Working Paper No. 21 – 2020
ISSN 2519-4941
This document has been produced by the International Labour Office with the financial assistance of the European Union.
Development and Investment Branch
Employment Policy Department
Copyright © International Labour Organization 2020
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ISSN 1999-2939; 1999-2947 (web .pdf)
First published 2020
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i
Abbreviations and acronyms
AAGR Average Annual Growth Rate
ARMM Autonomous Region in Muslim Mindanao
ATI Agricultural Training Institute
B Billion
CAGR Compound annual growth rate
CALABARZON Cavite Laguna Batangas Rizal Quezon (Region IV-A)
CARAGA Caraga Administrative Region (Region XIII)
CBOs Communiy-Based Organizations
CDA Cooperative Development Authority
CHLP Community/ Household-Level Coconut Processing
CMP Coconut Milk Powder
DA Department of Agriculture
DAR Department of Agrarian Reform
DCN Desiccated Coconut
DEPED Department of Education
DOLE Department of Labor and Employment
DOST Department of Science and Technology
DOST SETUP Department of Science and Technology Small Enterprise Technology
Upgrading Program
DPWH Department of Public Works and Highways
DSWD Department of Social Welfare and Development
DTI Department of Trade and Industry
FGDs Focus Group Discussions
FOB Freight on Board
GAP Good Agricultural Practice
GDP Gross Domestic Product
GOs Government Organizations
Ha Hectare
HYV’s High Yielding Varieties
ILO International Labour Organization
ILO CO-Manila International Labour Organization Country Office-Manila
KAANIB Kasaganahan sa Niyogan ay Kaunlaran ng Bayan
KEDP Kasaganahan sa Niyogan ay Kaunlaran ng Bayan Enterprise Development
Project
Kg Kilogram
KIIs Key Informant Interviews
L or li Liter
LGU Local Government Unit
M Million
MC Moisture Content
M&E Monitoring & Evaluation
MPC Multi-Purpose Cooperative
MSMEs Micro, Small and Medium Enterprises
MT Metric Ton
NAPC National Anti-Poverty Commission
NGAs National Government Agencies
NGOs Non-Government Organizations
NTCPEs Non-Traditional Coconut Philippine Export Sectors
OPA Office of the Provincial Agriculturist
OTOP One Town One Product
PCA Philippine Coconut Authority
ii
PDP Philippine Development Plan
PhilFIDA Philippine Fiber Development Authority
PhP Philippine Peso
PhP M Million Philippine Pesos
PLGU Provincial Local Government Unit
PSA Philippine Statistics Authority
QFUC Quezon Federation and Union of Cooperatives
REECS Resources, Environment, and Economics Center for Studies Inc.
SEA-K Self-Employment Assistance-Kaunlaran
SOCCSKSARGEN South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos
City (Region XII)
S&T Science and Technology
STED Skills for Trade and Economic Diversification
STRENGTHEN Strengthening the Impact of Trade on Employment
TESDA Technical Education and Skills Development Authority
TRAVERA Trade and Value Chains in Employment-Rich Activities
TOR Term of Reference
UCAP United Coconut Associations of the Philippines
UPLBFI University of the Philippines Los Baños Foundation, Incorporated
VCO Virgin Coconut Oil
VLCPs Village Level Coconut Processing Plants
4Ps Pantawid Pamilyang Pilipino Program
iii
Contents
Abbreviations and acronyms .................................................................................................................... i
Executive summary ................................................................................................................................. 1
1 Introduction ..................................................................................................................................... 8
1.1 Background of the study ......................................................................................................... 8
1.2 Rationale for the selection of non-traditional coconut export sector ...................................... 9
1.3 Objectives ............................................................................................................................. 11
1.4 Theoretical framework .......................................................................................................... 12
2 Methodology ................................................................................................................................. 13
2.1 Analytical framework ........................................................................................................... 13
2.2 Data gathering ....................................................................................................................... 13
2.3 Method of analysis ................................................................................................................ 16
3 Results and discussion .................................................................................................................. 17
3.1 Market trends, value chains, and employment needs in NTCPEs ............................................ 17
3.1.1 Coco sugar .................................................................................................................... 17
3.1.2 VCO ............................................................................................................................... 23
3.1.3 Coco coir ....................................................................................................................... 28
3.2 Firm level characteristics and business capabilities .............................................................. 33
3.3 Gaps in business capabilities................................................................................................. 33
3.4 Institutional mechanisms....................................................................................................... 34
3.5 Scanning the business environment: problems, issues, and opportunities ............................ 35
3.6 Skills development for NTCPEs ........................................................................................... 35
4 Summary, conclusions and policy implications ............................................................................ 45
4.1 Recommended strategies to reduce skills gaps and seasonality of labor .............................. 46
4.1.1 Strategies to reduce skills gaps ..................................................................................... 46
4.1.2 Hub integration business model for the production of coco sugar, VCO and coco coir
at a Village-Level Setting .............................................................................................................. 51
5 Constraints and problems encountered in implementing the STED project ................................. 57
References ............................................................................................................................................. 58
1
Executive summary
This report presents the results of study on Skills for Trade and Economic
Diversification (STED) in the Non-Traditional Coconut Export Sectors (NTCPEs),
focusing on coconut sugar, Virgin Coconut Oil (VCO), and coconut coir and peat. Due to
time constraints, data gathering was concentrated in provinces of Laguna and Quezon,
Region IV-A, Philippines. The STED was part of the International Labour Organization’s
Project on Strengthening the Impact of Trade on Employment (STRENGTHEN) which
was implemented from April 2016 until September 2019. The overall objective of the
project was to help the Philippines harness international trade and trade-related foreign
investment and leverage its export industries towards providing more opportunities for
decent work within developing countries and raising the number of developing-country
workers who are productively employed.
Traditional coconut by-products such as coconut oil, desiccated coconut, copra oil
cake or meal have consistently been in the top ten agricultural crops exported, various
coconut by-products have recently been identified. However, the ILO’s Project partners
noted that since the traditional coconuts exports are already well-established and various
value chains mapping studies, initiatives and plans have already been developed, there is
a need to go beyond the traditional sectors by focusing on the potentials and opportunities
that the non-traditional coconut export products present and represent in the Philippine
coconut industry, as a whole. Moreover, given competition from vegetable oil and palm
oil, international demand for Philippine coconut oil had declined thereby affecting world
prices and consequently local prices. Hence, this study concentrated on NTCPEs such as
coco sugar, VCO, and coco coir and peat.
The main objective of the STED project is to identify current and potential skill needs,
to estimate skill gaps, and to provide recommendations for the design of effective and
coherent skills development policies to support growth and expand opportunities for the
creation of productive employment in the non-traditional coconut export sectors of VCO,
coco sugar and coco coir. Specifically, this study intends to: (1) Conduct desk research
review of government policies and programs and private sector-led initiatives on skills and
human resource development, review of relevant and related literature on skills, and
analysis of past and current statistical data on skills and employment, among others; (2)
Incorporate results and findings of the TRAVERA (value chain) enterprise survey for the
STED study to identify and map out the skills needs, gaps and issues from the demand-
side perspective; (3) Conduct series of key informant interviews, focus group discussions,
stakeholder workshops, and sectoral consultation and dialogues with industry leaders,
skills providers and training institutions, among others, should and would already be
organized and conducted to also provide data and information on skills issues in the non-
traditional coconut export sectors (VCO, coco sugar and coco coir) from a supply-side
point of view; and (4) Provide concrete recommendations at the policy, institutional, and
enterprise level to enhance exports, promote economic diversification, enable more and
better jobs, ensure that firms find workers with the right skills, and help workers acquire
skills needed to find productive employment in the non-traditional coconut export sectors
of VCO, coco sugar and coco coir.
To attain the objectives of the study, primary and secondary data were gathered. Key
Informant Interviews, Focus Group Discussions and a consultation workshop were
conducted to gather primary data. FGDs were conducted with farmers/grass roots level
organizations, KIIs were administered to Government Agencies and a consultation
workshop was held with firms involved in the manufacturing of the three coconut
derivatives. Secondary data were gathered through a review of the literature and delving
into the TRAVERA survey results on skills developed and gaps in the coco sugar, VCO
and coco coir sectors; past and current statistical data on skills and employment; market
2
prospects and industry problems. Three case studies, representing each of the three coconut
derivatives were also done to determine and discuss forward and backward linkages. All
cases involved farm-level participation, specifically at the village-level or as an
association. A supply and demand analysis based on projected output and requirements in
the domestic and international markets were also undertaken to estimate the demand and
variances for skills in the three NTCPEs.
Since 1990s, programs introduced by both GOs and NGOs were geared towards
liberalizing coconut farmers from producing copra alone and achieving higher value for
their produce. One intervention that had been conducted by both the private and public
sector is the implementation of a wide array of trainings or skills enhancement measures.
Different government agencies had conducted programs and projects on capacity
development for the coconut industry at the farm or village level but most of them are
geared towards increasing knowledge of farmers on new production technologies so as to
increase farm productivity. Moreover, capacity building or enhancement had also been
extended specifically for non-traditional coconut products such as coconut sugar, virgin
coconut oil and coco coir. These capacity building activities are usually anchored on
various projects and programs that government entities administered. DOLE Region IV-B
in 2017 implemented the coco coir processing under the Integrated Livelihood Program
(ILP) or Kabuhayan Program to provide livelihood opportunities to 3,000 workers who
were affected by the suspension of two mining companies in Palawan. The project
provided assistance through training and equipment for coco net weaving. To secure
adequate supply of skilled laborers for various agri-business enterprises like VCO and
coconut sugar production, coconut coir twining and weaving, appropriate trainings should
be done in partnership with TESDA. Skills training on marketing, sales, business planning
and inventory management is likewise deemed necessary to ensure sustainability of
nucleus-estate enterprises.
Several production and processing manuals developed by government and the private
practitioners for the three NTCPEs provided practical knowledge and valuable skills in all
areas of producing VCOs, coco sugar and coir fiber from choosing the best raw material
to final packaging including quality control, good manufacturing practices and record
keeping. Further processing of residual by-products and downstream products were
likewise included in the manuals (i.e. soap, culinary oil, massage oils, skin care products,
coco-vinegar, sap syrups, etc.). Detailed training modules on the village level processing
of the three NTCPEs seems to be available from different NGAs, NGOs, academic
institutions, private companies and even on-line sources. However, actual skills training
on the different stages of the value chain appears to be lacking particularly on coconut
harvesting, dehusking and sap tapping.
The report highlights the various states of these NTCPEs in terms of their
competitiveness against global and domestic markets as well as the assessment of value
chains for each sector. It utilized primarily the results of a related project entitled Trade
and Value Chains in Employment-Rich Activities (TRAVERA) which provided the
different areas from which problems, issues, and gaps in the sectors were determined.
Moreover, the results of the project also provided valuable insights on the current skills,
skills demands, and skills gap among the NTCPEs. This was the forefront application of
STED in the Philippines.
In terms of the market competitiveness, NTCPEs were, in general, found to be
expanding over the last five years. Results of the TRAVERA showed annual growth rates
(AAGR) of 25%, 35% and 10% for virgin coconut oil (VCO), coco sugar, and coco coir,
respectively. However, there are also factors seen through the years which contributed to
sharp declines such as meeting demands for domestic and global markets (low
productivity); poor technological transfer; lack of equipment, facilities, and infrastructures
3
(i.e. road networks, communal facilities, etc.); lack of production of value-added products;
power and transport costs; price declines of the NTCPEs in the global market and lack of
access to other export markets; lack of access to financing mechanisms and non-
prioritization of the government of NTCPEs; lack of awareness and local utilization of
NTCPEs; and weak community participation in production.
In addition, market trends for coco sugar showed that the industry is valued at US$
1.3 B in 2017 (GrowAsia, 2017 as cited by TRAVERA). It is a booming industry with a
generally increasing price trends from 2016 (US$ 3,603/MT) to 2017 (US$ 6,860/MT).
Market forecasts for the product, particularly organic coco sugar, has a CAGR of 41%
which from 2017 to 2023 (www.digitaljournal.com as cited by TRAVERA). Top
producers of the product are The Philippines, Indonesia, and Thailand with a total
percentage of global exports of 80%; with the country having more than 50% of global
shares. Currently, the industry is not formally tracked in global trade flow databases but,
among the aforementioned top-producing countries, The Philippines was deemed more
centralized and scaled in the production of the NTCPE compared to Indonesia.
For VCO, current estimates for the industry is the highest among all coconut
derivatives which is valued at US$ 40.5 M. In the last five to six years, the production of
VCO is constantly fluctuating in volume but has seen highest yield in 2015 at 64,316 MT
before declining in 2016 to 41.09 million MT and reaching the lowest point of 27.72
million MT in 2017. However, since its lowest production point, the industry is currently
recovering with values reaching to 39.02 million MT in 2018 (28.95% AAGR). This trend
is also mirrored by its value except that it has seen no recovery yet and continued to
plummet from its highest point in 2015 at US$ 279,674,000 to its current lowest of US$
40,487,836 in 2018 (-71.94% AAGR). VCO produced in the country is currently number
one in the world accompanied by Indonesia and Sri Lanka.
While for coconut husk-based products, its current global and market trends are
continuously increasing both in volume and prices from 2011-2017. However, the
Philippines is not one of the top producers as this is dominated by Sri Lanka and India.
Current global shares are at 49,041 MT tons and valued at US$ 4.451 M. From 2011-2018,
an average of 17,754 metric tons of coco peat/dust were exported annually. The biggest
volume exported equivalent to 93, 589 M metric tons was recorded in 2018. In terms of
value, the highest was recorded in 2017 at 2.03 million US dollars FOB. The country’s
biggest market of coco peat/dust since 2011 is China with 86.8 percent share of the total
volume exported annually. Similarly, the coco husk cubes export performance and market
destinations from 2011-2018 is almost the same with the coco peat, with China as the
primary market having 87.1 percent share of the total export volume. Another coir product
exported is the baled coir with an average volume of 22,015 metric tons exported from
2011-2018.The highest volume of baled coir exported was in 2018 which totaled to 52,403
metric tons while the highest value was registered in 2016 which reached 12.58 million
US Dollars FOB. coco twine and coco pads/liner showing an average volume of 447 metric
tons and 89 metric tons exported foremost to the USA from 2011-2018, respectively.
Furthermore, in terms of value chain, production of coco sugar is impeded by
collection of sap in old trees that produce low toddy. Production is also affected by the
lack of skilled tappers. It was indicated that trained tappers are often pirated by other
producers. This means that a company or organization trains skilled workers only to lose
them because of higher offers and/or better working conditions. This creates a problem
that in order to solve one corporation’s lack of skilled workers, they need to pirate from
another, thus creating a cycle of lack of skilled workers. In terms of processing, current
scenarios are well-beyond optimized parameters. Efficiency, costs, and capacities to
production are generally below set “best” scenarios. In coco sugar producing areas, the
main concern is the availability of technology that can mechanize collection of sap but
4
would not affect quality. Current practices are still rudimentary and production is generally
manual. While in terms of marketing, linkage, promotion and product development are key
elements for the product. DTI had been striving to be proactive in engaging stakeholders
and partners in developing packaging of products that meets certification standards.
However, the vital factor contributing to low appeal of the product is due to the highly
niche-based (or targeted, narrow, specified market; i.e. consumed only by select sectors
with knowledge of the product, willingness and capacity to pay) and export-oriented (i.e.
product is developed for export and has not been marketed for local consumption)
marketing strategy. While the latter is beneficial to the country, domestic consumers have
low awareness of the product because current markets only caters to select sectors with
access.
The value chain for VCO involves stakeholders such as coconut producers and/or
intermediate processors, consolidators, tertiary processors-exporters and
wholesalers/retailers. The key stakeholders in the value chain are the processors-exporters
which produces the marketable VCO product. Coco meat is the main raw material used in
VCO production. The challenge of the sector is obtaining the appropriate volume and
quality of inputs to sustain domestic and global demands. Production of VCO is affected
by the lack of financing mechanism for small-enterprises as well as the decline of skilled
workers for collection and recovery of coco meat. Production processes use manual,
manned mechanized wet processes and dry processes. These processes require a lot of
fundamental labor training and skills training to bridge the gaps of varying qualities and
making the entire production cost-efficient. In terms of marketing, VCO is price
competitive because current processes meet the meticulous global standards. However, the
supply of VCO is currently static, if not declining, because of the erratic supply that will
sustain production. Most of the producers also have very limited rated capacities that
cannot meet the demand. Currently, the markets for VCO are varied but can also be niche-
oriented, particularly with cosmetics and aesthetic products of firm-level enterprises.
Wide-scale consumption of the product, as stated in the different information elicitation
activities, can be augmented if trainings and skills development for promotion and
marketing of VCO will also be implemented at smaller production scales. The primary
market for VCO in the Philippines is in the export sector due to the growing demand
globally. The existing export markets of the firms are Europe, Middle East, Canada, US,
Malaysia, Singapore, China and Japan.
For coco coir, its general production is currently utilizing decortication of husks. A
critical component of fiber production is drying and baling. There is a need to supply
skilled workers for optimal recovery and sustain supply of inputs. The process is laborious
and production is impeded by seasonality of income. It was noted that, while there are
standards set for coconut fiber (coir) and coco peat, it is up to the market (whether domestic
or global) to provide their own standards based on their application. This is specifically
true for export markets wherein buyers have their own standards, which are stipulated
within the contact of Purchase Order. In terms of processing, twining of coco coir to
produce the raw materials for handicrafts is generally done manually. Development of
technology for twining has not been met and the process remains to be done manually.
Promotional activities are needed to streamline domestic and international marketing of
the product. At present, expanding markets is limited by the lack of knowledge on the
domestic and international demands that also impede the determination of the skills
required for better marketing of coco coir based products. Current markets of coir, relative
to the other NTCPEs are smaller. Moreover, current demand for coco coir based products
are generally limited and sporadic. Thus, there is a need to further promote the use of coco
coir based products into a more multi-functional products to expand and create new
markets.
5
The study also sought the different factors contributing to the dearth of production
volumes. These factors included the decrease in general productivity, unstandardized
processes, and lack of cost-effective mechanisms to improve production at all levels. Major
insights from the conduct of Key Informant Interviews (KIIs), Focus Group Discussions
(FGDs), and other STED activities (i.e., consultation workshop, Round Table Discussion
with service providers and Multi-Stakeholders Forum) indicated that the main reason may
also be attributed to the lack of skills of the workers involved in the different NTCPEs in
the main components of the value chains. At the production component, all three NTCPEs
lack sufficiently trained workers in terms of harvesting and pre-processing (i.e. collection
of sap for coco sugar; de-shelling and paring for VCO; and manual processing before
decortication for coco coir). On the other hand, handling of machineries required for more
mechanized production of the NTCPEs needs skills training for greater efficiency in the
processing components for each NTCPE’s value chain. Lastly, the marketing aspect of the
value chains of the NTCPEs needs training for better awareness of the domestic and
international demand for each NTCPE; lack of entrepreneurial skills; lack of promotional
skills; and lack of developed marketing style for each NTCPE.
At present, skills gaps in the production of the various NTCPEs currently point to the
lack of capacity building platforms for different components in the value chains. For coco
sugar, skills gaps are attributed to the lack of skilled workers for tapping. There is no
particular agency involved in developing this skill. Majority of tappers developed their
skills through years of experience. For VCO, skills gaps are on manual deshelling and
paring. Similar to tapping in coco sugar, there is also no particular agency involved in
developing these skills. These skills were also self-developed. In terms of processing for
VCO, gaps are line production using traditional processes, efficient recovery and handling
of machineries while marketing gaps are on negotiation skills. Skills gaps in coco coir
processing are on manual twining for rope production and lack of technical training for
handling machineries for a cost-effective production while in terms of marketing, gaps are
the lack of value-addition/product innovation and product packaging and enhancements
and management capabilities. It is proposed that government agencies such as Philippine
Coconut Authority (PCA), Department of Science and Technology (DOST), and
Agriculture Training Institute (ATI) should be more proactive and down to business in
providing the necessary skills training for production of coco sugar, VCO, and coco coir.
The proactive stance should be more specific for the various needs and cross-cutting
concerns of the different producers in terms of enhancing capacities for cost-effective
production technologies and methodologies.
In terms of business capabilities, production gaps are generally focused on the lack
of skilled workers for manual labor. In addition, selection of varieties for planting, fixed
inputs, management practices and capital are generally those in need of enhancement.
Trainings for selection of high-yielding varieties must be the first initiative of the
businesses involved in NTCPEs. Management practices to control pests and diseases are
also generally lacking, if not rudimentary. Integrated pest management and fertilization
are required to ensure quality inputs for the production of NTCPEs. On the other hand,
fixed inputs, such as land, and financing are cross-cutting concerns for further
enhancement of business capabilities.
In terms of processing, it was a general concern for the three NTCPEs to have a more
mechanized but cost-effective processes. There is also a need for skills training in all
aspects of operation and processing to ensure that quality meets standards. Businesses
should also focus in enhancing skills of current workers through self-initiative trainings or
by sending them in government provided skills development workshops. Trainings should
also cascade to line workers from managerial levels.
6
For marketing, business capabilities are generally sufficient but there is a need to
increase promotional capabilities, especially at the domestic level. It was emphasized by
PCA that the business involved in NTCPEs are generally struggling to meet domestic
markets because of poorly promoted products. Product developments are also limited to
those with the capacity to improve packaging and those that can attend trainings.
The perceived gaps in furthering NTCPEs production are found at the policy,
institutional and enterprise levels. At the policy level, there is no apparent or well-defined
monitoring of NTCPEs that will guide players about market movements and trends.
Meanwhile, trade in NTCPEs are largely unregulated which results in considerable price
volatility that may inevitably affect enterprise viability. There is also a dearth of awareness
among consumers and incentives on producers that impinge on domestic demand and
supply situations.
At the institutional level, there seems to be a confounding of the roles on skills
development for the production of NTCPEs among the various national government
agencies such as PCA, DOST, and DA. If and when there are initiatives they are not
coordinated, which are usually manifested in the training that are provided to stakeholders.
There is also room for improvement as far as creating awareness among the potential
consumers of NTCPEs.
At the enterprise level, there are localized paucity of skilled workers and standards
for acquired skills and product quality are wanting. Marketing skills are also found to be
meager which constrain the development of the NTCPEs. Safety and health training are
occasional and usually provided by firms that employ regular workers and in cases of
seasonal workers these are virtually nil.
To address the identified skills gaps, strategies at the policy, institutional and
enterprise level were recommended. At the policy level, eradication of skills gap relies on
cross-cutting social issues of adequacy of economic gains from the sector and by providing
active financing mechanisms, especially for village-level production. Measures of
changing perceptions should also be viewed as major driving force in eliminating skills
gap because these will eliminate the lack of skilled workers because of their short-term
view of economic gains. This is proposed to be included in the agencies’ IEC and
coordination activities. In relation to this, it is also proposed that skills gaps should be
identified in all sectors and stakeholders to produce a manual of good practices that can be
replicated.
At the institutional level, skills gaps in the production of the various NTCPEs
currently point to the lack of training for different components in the value chains. In the
enabling environment, it was proposed that government agencies such as PCA, DOST, and
ATI should be more proactive in providing the necessary skills training for production of
coco sugar, VCO, and coco coir beyond peculiar firms that were reached by these agencies.
The proactive provision should be more specific for the various needs of the different
producers in terms of enhancing capacities for cost-effective production technologies and
methodologies.
At the enterprise level, for the production aspect, skills gaps are more attributed to
the lack of skilled workers for tapping and harvesting in VCO and coco sugar production,
while lack of skilled twiners is apparent for coco coir. This was addressed and proposed
by the various participants in the information elicitation activities that pooling of skilled
workers should be implemented. It was indicated that handling of machineries is a
necessity in all NTCPEs and require constant trainings for operating equipment. Moreover,
skills development for manual processes in VCO production was highlighted as a means
to close skills gaps for the sector. This can only be achieved by harmonizing the roles of
7
identified agencies and including the support of the private sector for skills development
where gaps in service provision are present.
Aside from the aforementioned recommendations, a proposed hub integration
business model for the production of coco sugar, VCO and coco coir at the village-level
setting is also recommended primarily to address the problem of seasonality of labor
demand which is heavily dampening the growth of the three NTCPEs . Since, current
production of NTCPEs in the areas visited was done in small and disaggregated farm
parcels which lead to low volumes primarily because of the low tree per unit area ratios
and ‘one-type production’ schemes in these small farms. Moreover, the processes involved
in the conversion of raw coconut to the NTCPEs are greatly unstandardized because of this
considerable disaggregation. In turn, the quality of products is greatly varied. In order to
address these problems, integrated production of NTCPEs can be viewed as a suitable
approach. Benefitting from economies of scale and economies of scope are primary. The
integration of these farms into hubs provides the mechanism for sustainability of the
industries surrounding NTCPEs. Moreover, the integration of parcels into a single hub
ensures that skills development and training provision are centralized and better
determined.
In the conduct of the study, major constraints and problems encountered revolved
primarily on the procedure of elicitation and quality of available data. In terms of
elicitation, main problem lies within the coordination of workshops to various companies
and agencies concerned in the production of NTCPEs. On the other hand, effectively
reporting the state of skills development and needs of the NTCPEs were also inhibited by
the lack of available data. The reference sought and considered were those centering on
skills enhancement and development. However, to date, there is limited number of studies
and/or date which focused primarily on skills development particularly of the three
NTCPEs. Thus, it was challenging to search for published articles and/or sufficient
literature with specified skills development needs.
8
1 Introduction
1.1 Background of the study
The International Labour Organization for the Philippines (ILO CO-Manila)
implemented a Project on Strengthening the Impact of Trade on Employment
(STRENGTHEN) since April 2016 until September 2019. The overall objective of the
project was to help the Philippines harness international trade and trade-related foreign
investment and leverage its export industries towards providing more opportunities for
decent work within developing countries and raising the number of developing-country
workers who are productively employed.
One of the major components of the STRENGTHEN Project was to provide
programme support to the Philippines in developing and upgrading its export sectors
through value chains and skills upgrading and development. The STRENGTHEN Project’s
programme support component was comprised of two subcomponents which are: (1) Trade
and Value Chains in Employment-Rich Activities (TRAVERA) and (2) Skills for Trade
and Economic Diversification (STED). The first subcomponent aimed to map out and
identify potentials and opportunities along the value chains of an export sector and the
second one intends to align skills policies and programmes with value chain strategies for
export growth, economic diversification, employment generation and decent work
promotion.
This study covers the second subcomponent, the STED, focusing on the Philippines.
However, results of the TRAVERA will serve as inputs in the preparation of the STED
report. Moreover, this study will center on the coconut industry which remains as the
Philippines’ leading agricultural export product. In years 2017 and 2018, coconut-based
products such as coconut oil, desiccated coconut, copra oil cake or meal and other coconut
products were listed in the top ten agricultural crops exported by the Philippines (Table 1).
It is worth noting though that the amount of coconut oil exported (in Freight on Board
(FOB) terms) declined by nearly 25 percent.
The production of coconut in the country comes second next to grain commodities
(i.e. rice and corn) in terms of area and value production. Most recent statistics on the
commodity in 2017 showed that it covers 3,612.304 million hectares (historical average of
3,524.220 hectares; PSA, 2018a) and production value of 120,336.29 million pesos (PSA,
2018b). Disaggregated values showed that, in terms of area, Quezon Province covers the
largest area (10%) and followed by Zamboanga del Norte (6.6%) and Davao Oriental
(4.0%) (PSA, 2018a). Similarly, production values of coconut also follows this order but
with the inclusion of Maguindanao. Percentage of production values showed that 9.5%
comes from Quezon Province; 5.6% from Zamboanga del Norte; and 5.1% from
Maguindanao (PSA, 2018a). Aggregated contribution of the commodity the country’s
agricultural output was 3.52% in the same year (PSA, 2018A) with at least 3.5 million
farmers dependent on the industry (DA-ARMM, undated).
9
Table 1. Top ten agricultural crops exported by the Philippines in 2017 and 2018.
Agricultural Crops
2018 2017
FOBa % Share FOBa % Share Growth Rate
Bananas, Fresh 159.31 48.71 40.22 18.69 296.09
Coconut Oil, crude and refined 79.60 24.33 105.90 49.20 (24.84)
Pineapple and Pineapple Products 26.69 8.16 24.59 11.42 8.55
Desiccated Coconut 21.75 6.65 15.07 7.00 44.30
Processed Tropical Fruits 16.49 5.04 14.56 6.76 13.30
Copra Oil Cake or Meal 8.21 2.51 4.96 2.30 65.48
Other Agro-based 4.26 1.30 2.42 1.12 76.30
Other Fruits and Vegetables 3.83 1.17 1.60 0.74 138.70
Other Coconut Product 2.39 0.73 2.69 1.25 (11.11)
Mangoes 2.29 0.70 0.95 0.44 141.93
Abaca Fibers 2.28 0.70 2.29 1.06 (0.11)
TOTAL 327.10 100.00 215.25 100.00
a Freight on Board, In Million Philippine Pesos Source: Philippine Statistical Authority
1.2 Rationale for the selection of non-traditional
coconut export sector
Production and market competitiveness of the selected derivatives: While
traditional coconut by-products such as coconut oil, desiccated coconut, copra oil cake or
meal are consistently in the top ten agricultural crops exported, various coconut by-
products have recently been identified. A total of 42 coconut derivatives are produced in
the country (PSA, 2018a) which include coconut water, coco coir, coco peat, coco vinegar
and coco sugar, among others. In 2018, virgin coconut oil (VCO) produced was 29,487.57
m.t. and valued at 3,837.55 million pesos. Given the volume of production, 78.9% is
exported to USA (50.4%), Brazil (15.5%), and Germany (13.0%) while the remaining
21.1% is consumed domestically for the different coco-food processing plants in the
country. Based on the Trade Directory of the Philippine Coconut Authority (PCA, 2017a),
there are at least 63 manufacturers, processors, traders and exporters of VCO. At least 60%
of these export the VCO manufactured with at least 35 entities coming from Regions IX
to XIV in Mindanao.
On the other hand, coconut coir produced in 2017 was 7.7 m.t. and valued at
650,462.40 pesos (PSA, 2018a). The entirety of the production in that year was exported
to the USA. While the domestic utilization of the derivative is generally unknown, coconut
coir is utilized by the Department of Public Works and Highways (DPWH) in its green
engineering projects (i.e. bank stabilization and erosion control) as in the case of Unisan,
Quezon (Dela Cruz, Pobre & Gabrino, 2002 as cited by PCA, 2003). In addition, based on
the trade directory for coir peat husk, at least 51 entities produce the derivative with at least
63% as trader-exporters (PCA, 2017b). Similar with the production of VCO, coconut coir
is extensively produced in Mindanao particularly from Regions X to XIII based on the
trade directory.
For coconut (sap) sugar, 381.39 m.t. was produced and valued at 77.51 million pesos
(PSA, 2018a). Revenues from the derivative came from exports to Germany (23.6%), Sri
Lanka (17.7%), and USA (16.7%) totaling to 58% of the overall production (PSA, 2018a).
Utilization of the remaining 42% of the total production is generally unknown but at least
32 entities are listed as coconut sugar suppliers in the PCA’s trade directory (PCA, 2017c).
10
At least 63% of these suppliers are processor-exporters and 63% comes from Regions X
to XIII in Mindanao.
Unfortunately, disaggregated values of these derivatives, in terms of top producing
areas, were lacking. In addition, while the country exports these products, a consolidating
agency or institution was not identified because the values presented were derived from
the trade directories only. Number of farmers engaged in the production of each derivative
was also not identified because of the lack of sufficient statistics and data sources.
Moreover, closely-related data on the number of farmers reflected in the database of PCA
only showed the farmer beneficiaries of programs such as accelerated planting/re-planting
and fertilization (PCA, 2017d). These indicated 8,499 farmers were serviced coming from
the database of the KAANIB Enterprise Development Project from 2014 to 2016.
Needs and prospects of coconut derivatives: Prades, Salum & Pioch (2016) showed
that, while the markets for coconut and its derivatives are on the rise, lack of technology
and artisanal methods serve as the primary hindrance in gaining greater production.
Moreover, since most products of coconuts are related to ingestion, nutritional benefits
should be fortified because raw materials, culture conditions, and post-harvest techniques
are mostly condoning their sources in terms of their innate nutritional values. In addition,
the cultivation systems in top-producing countries are mostly family owned and are greatly
subjected to preferential choice of commodity, vis-à-vis, conversion to organic agriculture
or other land-uses. These insights are particularly directed to the production and marketing
of VCO and coconut flour.
According to the Coco-Coir Industry Road Map (2013-2016), the following are the
different needs of the derivative: a) market development and promotion (domestic and
export) in order to strengthen awareness and improve value chains; b) production and
productivity in terms of machination and sustainability of supply of raw materials; c)
technology development transfer as a need to lack of technology and machinery; d)
entrepreneurial development in developing skills for coconut farmers; e) institutional
development for greater participation; f) access to financing and generation of investments
to address aggregated financial concerns; g) policy improvement and business
development in order to attain regulatory processes; and h) monitoring and evaluation as
a tool for verification of actual production, particularly trade competitiveness (National
Coco Coir Inter-Agency Technical Working Group, undated). It was stated in the coco-
coir road map that its Policy/Program/Project for entrepreneurial development is through
continuous conduct of entrepreneurial training to farm organizations without specifying
what supposed trainings were these. No actual document regarding the action of the agency
for this area of concern is available.
Based on the Coconut Roadmap of the NAPC (2016), the following are the needs of
the sector in relation to poverty alleviation: a) agro-enterprise development – aimed to
heighten farmer engagement in the value chain of coconut and avoid subsistence farming
practices; b) facilitation of agrarian reform in coconut areas – aimed to achieve tenure
security for farmers in coconut areas; c) social protection – geared towards developing
safety nets for poor farmers in relation to externalities (i.e. typhoons, pests, and economic
and social shocks) and improve general well-being; and d) institutional reforms – provision
of strengthened policy and governance oversight on the industry towards the improvement
and empowerment of coconut farmers. To date the road map has not been implemented
and is still on its formulation period. The aspects related to training and skills development
is agro-enterprise development under the SEA-K (Self-Employment Assistance-
Kaunlaran) under the Department of Social Welfare and Development (DSWD)
particularly on orienting and providing skills training on enterprise development and
management, crop processing, and marketing.
11
Institutional views on promoting non-traditional coconut export products: The
ILO’s Project partners noted that since the traditional coconuts exports are already well-
established and various value chains mapping studies, initiatives and plans have already
been developed, there is a need to go beyond the traditional sectors by focusing on the
potentials and opportunities that the non-traditional coconut export products present and
represent in the Philippine coconut industry, as a whole. It was also noted that given
competition from vegetable oil and palm oil, international demand for Philippine coconut
oil had declined thereby affecting world prices and consequently local prices.
In particular, given that they are non-traditional and still emerging as discussed in the
previous sections, then all the more that these non-traditional coconut export sectors and
products should be given attention and focus by identifying their export value chain
strengthens, weaknesses, threats, and potentials and opportunities.
Furthermore, project partners specifically chose to focus on non-traditional coconut
export sectors such as VCO, coco sugar and coco coir as the because of their recent
encouraging export performance and the government’s effort on growing, developing,
expanding and upgrading the competitiveness of these non-traditional export sectors.
In addition, the government’s anti-poverty reduction programmes in the coconut
sector are also centered and anchored on these sectors, particularly under the KAANIB
Enterprise Development Program (KEDP) of PCA, which implements
community/household-level coconut processing (CHLP) programmes that include
livelihood and entrepreneurial activities promoting and encouraging coir-based processing
(e.g. coir-based fertilizer production), coco sugar production, and VCO processing through
the establishment of processing facilities, and the provision of machineries and equipment
for coir-processing, and VCO and coco sugar production.
1.3 Objectives
The main objective of the STED project is to identify current and potential skill needs,
to estimate skill gaps, and to provide recommendations for the design of effective and
coherent skills development policies to support growth and expand opportunities for the
creation of productive employment in the non-traditional coconut export sectors of VCO,
coco sugar and coco coir. Specifically, this study intends to:
1. Conduct desk research review of government policies and programs and private
sector-led initiatives on skills and human resource development, review of relevant
and related literature on skills, and analysis of past and current statistical data on skills
and employment, among others;
2. Incorporate results and findings of the TRAVERA (value chain) enterprise survey for
the STED study to identify and map out the skills needs, gaps and issues from the
demand-side perspective;
3. Conduct series of key informant interviews, focus group discussions, stakeholder
workshops, and sectoral consultation and dialogues with industry leaders, skills
providers and training institutions, among others, should and would already be
organized and conducted to also provide data and information on skills issues in the
non-traditional coconut export sectors (VCO, coco sugar and coco coir) from a
supply-side point of view; and
4. Provide concrete recommendations at the policy, institutional, and enterprise level to
enhance exports, promote economic diversification, enable more and better jobs,
12
ensure that firms find workers with the right skills, and help workers acquire skills
needed to find productive employment in the non-traditional coconut export sectors
of VCO, coco sugar and coco coir.
1.4 Theoretical framework
The coconut is deemed the tree of life for its versatility and multifarious uses.
Nonetheless, the coconut industry is beset by low productivity and low value of its products
owing to a variety of reasons. Massive replanting, intercropping, use of high yielding
varieties and fertilization programs, among others, were launched and touted to address
low productivity and incomes of the small farmers. Meanwhile, there is a recurrent bid to
shift from the traditional copra making to other commodities that creates value addition.
Product diversification has been beckoned to settle the persistent poverty in the coconut
areas by producing non-traditional products including coco sugar, coco-coir/peat and
virgin coconut oil that are prized for its health benefits and environmental benefits.
Corollary to the product diversification is market diversification that aims to expand the
markets and create niches for these products both in the international and domestic arenas.
This type of diversification will reduce the adverse effects of the vagaries of the market in
traditional products which has a lot of substitutes and oligopsonist tendencies.
Figure 1. Theoretical framework for the STED study.
Product and market diversifications entail the shift in technologies and will require
new and expanded labor opportunities and skills. It is in this framework that the study will
address the changes and derived demand in labor requirements and competences. In
addition, the study will interact with the actors/players and institutions involved in this
diversified product and market environment to ascertain the constraints and potential
solutions to achieve these goals.
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2 Methodology
2.1 Analytical framework
Figure 2 illustrates the analytical framework used to attain the objectives of the study.
Primary data were gathered through the conduct of KIIs and FGDs. Moreover, other
activities such as multi-stakeholders consultation and dialogues with industry leaders,
skills providers and training institutions conducted to derive additional information and
solicit data that may enhance recommendations that will be forwarded. Secondary data
were gathered and reviewed. All information that will be generated will be used in the
analysis of the current and potential skills as well as skills gaps in the three non-traditional
export sectors. Issues were identified. From the results of the analysis, recommendations
for the design of effective and coherent skills development policies for the creation of
productive employment in the identified non-traditional coconut export sectors were
provided.
2.2 Data gathering
Two types of data, primary and secondary, were gathered. Key Informant Interviews,
Focus Group Discussions and a consultation workshop were conducted to gather primary
data. Due to the exigency of the study given that the STRENGTHEN Project is about to
be terminated on September 30, 2019, gathering of primary data, as per Term of Reference,
was concentrated in the CALABARZON Region, specifically the provinces of Laguna and
Quezon. Based on a list of traders, exporters, and processors secured from the Philippine
Coconut Authority, interviews or visits were conducted in the 14 enumerated enterprises
in Table 2. The list of intended respondents originally contained 16 firms but the number
was trimmed down to 14 since some firms had constraints accommodating the STED
research team given the short data gathering period while others did not respond positively
to our request. It is notable that majority (56%) of the enterprises deal with VCO while
only three and four are into coco coir and coco sugar, respectively (Table 3). Fifty-six
percent of the respondents are processors cum exporters followed closely (43%) by
processors. A larger share (62%) of the respondents is located in Quezon province.
14
Table 2. List of respondents for the focus group discussions and key informant interviews.
Name of Company
Product Line Business Activity/ Nature of Business
Office Address Plant Site Remarks
1. Greenlife Coconut Products Philippines Inc.
VCO, Other Coconut Products Producer, Trader/ Exporter
Coco food Processor & Exporter
Km 144 Brgy. Wakas Tayabas City, Quezon
Km 144 Brgy. Wakas Tayabas City, Quezon
In TRAVERA list; Member of VCO Producers and Traders Association of the Phil.
2. Alex and Lizel VCO
VCO Processor Tayabas City, Quezon
Sariaya, Quezon
3. Primex Coco Products, Inc.
VCO, Dcn, Cmp, Cocoflour, Coconut Water & Other Coconut Products
Coco Food Processor
Bo. Mangilag Candelaria, Quezon
Bo. Mangilag Candelaria, Quezon
4. Pasciolco Agri Ventures
VCO, Coco Sugar, Coconut Tar, Coconut Vinegar, & By Products
Coco food Processor & Exporter
1358 Capistrano St. Lusacan, Tiaong, Quezon
Brgy. Anastacia, Tiaong, Quezon
In TRAVERA list; Member of VCO Producers and Traders Association of the Phil.
5. Amazing Foods Corp
VC0, Massage Oil, Coco Sugar, Coco Ginger, Vco Soap, Cocojam, Coco Marmalade
Exporter & Trader 124 Sm Brgy. Bagong Pook, Sta. Maria, Laguna
124 Sm Brgy. Bagong Pook, Sta. Maria, Laguna
6. Alabat Coco Sugar Producers Association
Coco sugar Processor Coco Hub, Brgy. Camagong, Alabat, Quezon
Coco Hub, Brgy. Camagong, Alabat, Quezon
7. Cocoplus Aquarian Development Corporation
VCO, Massage Oil, Soap
Coco food Processor & Exporter
Brgy. San Bartolome, San Pablo City, Laguna
Brgy. San Bartolome, San Pablo City, Laguna
In TRAVERA list; Member of VCO Producers and Traders Association of the Phil.
8. Wua Yei Enterprises.
Coco Fiber, Coco Peat, Coconut Shell Charcoal
Processor & Exporter 848 Purok 3, Brgy. Masapang, Victoria, Laguna
848 Purok 3, Brgy. Masapang, Victoria, Laguna
9. O' Mark Enterprises
VCO Coco food Processor Science Park, UPLB, Los Baños Laguna
Science Park, UPLB, Los Baños Laguna
10. Pilipinas Eco Fiber Corp.
Coco Fiber, Coco Peat
Processor Km. 79 Brgy., San Mateo, San Pablo City, Laguna
Brgy San Mateo, San Pablo City, Laguna
In TRAVERA list
11. Quezon Federation and Union of Cooperatives
VCO Processor New Zealand St., Phase IV, University Village, Brgy. Ibabang Dupay, Lucena City, Quezon
New Zealand St., Phase IV, University Village, Brgy. Ibabang Dupay, Lucena City, Quezon
12. Tropical Prime Coir Corp
Coco Fiber, Coco Peat
Processor Kanlurang Maligaya, Agdangan, Quezon
Kanlurang Maligaya, Agdangan, Quezon
13. Mamala 1 Multi-Purpose Coop
VCO Processor Brgy. Mamala, Sariaya, Quezon
Brgy. Mamala, Sariaya, Quezon
14. Annato Farm Coco Syrup Processor Brgy. Talim, Lucena City, Quezon
Brgy. Talim, Lucena City, Quezon
Source of Basic Data: Philippine Coconut Authority
15
Table 3. Nature and location of enterprise of identified respondents by type of Non Traditional Coconut Philippine Export sector.
Nature/Location of Enterprise
Type of Non-Traditional Coconut Philippine Export Sector*
VCO Cocosugar Cococoir Total
Nature of Enterprise
Processor only 4 25.00 1 6.25 2 12.50 7 43.75
Processor and Exporter 5 31.25 3a 18.75 1 6.25 9 56.25
TOTAL 9 56.25 4 25.00 3 18.75 16 100.00
Location
Quezon 6 37.50 3a 18.75 1 6.25 10 62.50
Laguna 3 18.75 1 6.25 2 12.50 6 37.50
TOTAL 9 56.25 4 25.00 3 18.75 16 100.00
Source of Basic Data: Philippine Coconut Authority a VCO shares 3 same respondents with coco sugar *multiple responses
Arrangements for the FGDs and KIIs with identified respondents and critical
agencies, such as the United Coconut Associations of the Philippines and Philippine
Coconut Authority, were done initially during the 2nd World Coconut Congress which held
from August 27-29, 2019 by the STED research team. Besides the intent of making initial
coordination of interviews, papers presented in the conference might add insights to the
skills gaps, employment opportunities and market situation of coco sugar, VCO, and coco
coir. However, conference papers presented in the 2nd World do not have much information
on the skills development aspect rather only provided scenarios of the coconut industry, in
general.
Three case studies, representing each of three coconut derivatives were also done to
determine and discuss forward and backward linkages. All of these cases involve farm-
level participation, specifically at the village-level or as an association. The cases for coco
sugar, VCO and coco coir are the Alabat Coco Sugar Producers Association, Greenlife
Coconut Products Philippines Inc., and Tropical Prime Coir Corporation, respectively.
The participants of the consultation workshop were firms involved in manufacturing
of VCO, coco sugar and coco coir/peat and representatives from Philippine Coconut
Authority (PCA) – Region IV-A and Department of Trade and Industry (DTI) . During the
consultation workshop, the participants were divided into three groups (VCO, coco sugar,
and coco coir), depending on what their firms were processing/manufacturing. A FGD was
held with each group using a set of guide questions. Key Informant Interviews were also
conducted with the PCA, United Coconut Associations of the Philippines (UCAP),
Department of Trade and Industry (DTI), and Philippine Fiber Development Authority
(PhilFIDA). Another consultation workshop with skills providers and training institutions
will also be conducted in October.
Different FGDs with farmer/grass roots level organizations were also done for each
type of coconut derivative. For coco sugar, the farmers group operating a coco sugar
enterprise in Alabat, Quezon was covered. Meanwhile, FGDS among farmers’ or village
organizations in Sariaya, Quezon and Agdangan, Quezon were conducted as part of the
cases for coco coir and Virgin Coconut Oil.
Secondary data were also be gathered, foremost of which is the TRAVERA survey
results. Other literatures delving on skills developed and gaps in the coco sugar, VCO and
16
coco coir sectors and past and current statistical data on skills and employment, among
others, were also gathered. Market prospects and industry problems were delved on as
well.
Figure 2. Analytical framework for the STED study
2.3 Method of analysis
The study utilized descriptive analysis to address and tackle the objectives of the
study. A systematic review of literature including the TRAVERA study, public policies
and programs, private sector initiatives on human resource development, among others,
was conducted. A supply and demand analysis based on projected output and requirements
in the domestic and international markets were also undertaken to estimate the demand and
variances for skills in the non-traditional coconut export sectors, i.e., coco-sugar, VCO and
coco-coir given production and post-production technologies, financial and market
constraints as well as the scale and organization of production enterprises.
A labor market information inquiry that includes information about a specific labor
market, its occupations, their locations, wages, supply and demand, and demographics are
still being approximated to determine possible supply side constraints.
17
3 Results and discussion
Determination of the different characteristics of the three NTCPEs were gauged based
on market trends (i.e. demand and supply), value chain (i.e. production, processing, and
marketing chain integrated from the findings of TRAVERA and STED), and employment
needs. Moreover, discussion and findings also focused on the firm-level characteristics and
business capabilities of actors in each sector as a precursor in identifying the skills needed
in relation to their capacities to engage in exporting NTCPEs. This also put forth the
determination of the gaps in their business capabilities with the objective of identifying the
areas for improvements in the business aspect of NTCPEs operations. Institutional
mechanisms were likewise drawn from the various entities that play facilitating and
enabling roles for the development of the NTCPEs. The different problem areas, issues,
and opportunities were also determined through a thorough analysis of the policies,
political environment, socio-economic, technological, environmental, and legal settings.
Lastly, it was also imperative to determine the current skill sets and the skill demands for
the three NTCPEs as a means to determine way-forward scenarios.
3.1 Market trends, value chains, and employment
needs in NTCPEs
3.1.1 Coco sugar
1. Market trends
The industry of coco sugar was valued at US$ 1.3 B in 2017 (GrowAsia, 2017 as
cited by TRAVERA). It is a booming industry with a generally increasing price trends
from 2016 (US$ 3,603/MT) to 2017 (US$ 6,860/MT). Market forecasts for the product,
particularly organic coco sugar, has a CAGR of 41% which from 2017 to 2023
(www.digitaljournal.com as cited by TRAVERA). Top producers of the product are The
Philippines, Indonesia, and Thailand with a total percentage of global exports of 80%; with
the country having more than 50% of global shares. Currently, the industry is not formally
tracked in global trade flow databases but, among the aforementioned top-producing
countries, The Philippines was deemed more centralized and scaled in the production of
the NTCPE compared to Indonesia. It was also provided that the current threat for the
product stems on the adulteration, i.e. mixing of sugarcane, which brings about trepidations
on product authenticity in the global market (Angulo, 2019). Rising opportunities, on the
other hand, were reported to be based on ongoing researches in the technological
improvement of harvesting and cooking done in Indonesia (Angulo, 2019).
A. Demand settings
Coco sugar is one of the more marketable coconut derivatives in global trade. As the
top producer of the product globally, the Philippines exploits export markets in four main
global regions: 1) Asia-Pacific – including Australia, China, Japan, New Zealand,
Singapore, and South Korea; 2) Europe – including France, Germany, Netherlands,
Norway, and United Kingdom; 3) Middle East and South Africa; and 4) The Americas –
including Canada, Latin America, and United States. The latter had a share of US$ 22 M
in 2015 (ILO and REECS, 2019). In the same year, Indonesia had the bigger share of export
which was valued at US$ 38.23 M while the Philippines having a share of US$ 1.24 M in
2017 (ILO and REECS, 2019). It was identified that there are at least 13 global key players
for the product with five (5) representatives from the Philippines. International prospects
for the industry lies on the increasing demands for natural products like food, beverage,
and cosmetics in China, Europe, India, and Korea. Global market rise of the product also
18
springs from better health and nutritional mindset because of the rising cases of obesity
and diabetes.
On the other hand, local demand scenarios are not very well documented. For one,
the use of the product is very minimal because of the continued reliance for sugarcane-
based sweeteners/additives (Angulo, 2019). In the country, the consumption is granulated
in form which was deemed superior in quality because of the non-addition of ant-
fermenting agents such as sodium metabisulfite. There is also an active promotion of
alternative sweeteners in the country because of the rising cases of lifestyle induced
metabolic disorders. As of 2015, local industry of coco sugar is valued at PhP 100 M which
is exempted from additional excise tax on sweetened products (Angulo, 2019). A corollary
threat to the coco sugar market is the proposed liberalization of sugar imports that will
bring in lower priced foreign sugar in the local market which, in turn, will make coco sugar
even less competitive price-wise.
B. Supply settings
Supply for coco sugar is currently at 4,000 MT/year based on the report of Angulo
(2019). The bulk of percentage shares comes from Mindanao encompassing 82% that
includes Davao, SOCCSKSARGEN, Northern Mindanao, and CARAGA as primary
producers. CALABARZON comes third after Davao and SOCSSKSARGEN and the
remaining 9% is contributed by other areas in the country. These percentages of producers
were based only on the PCA-Registered processors. Volume of production for export has
been increasing from no production in 2014 and 2015 to 0.34 MT in 2016 to 181 MT in
2017 ((ILO and REECS, 2019). Supply scenarios are currently affected by rudimentary
sap collection process using bamboo bridges and ladders. In addition, the product is not
entwined in the cultural and traditional settings of the country which may also impede
supply enhancements. However, it was also indicated that there is an active support for
improved sap collection through the use of high-yielding dwarf varieties, technology
transfer, and provision of processing facilities that may increase general supply of the
product (Angulo, 2019). Current large commercial scale producers of domestic coco sugar
are also those engaged in coconut desiccation.
Figure 3. Bamboo bridges connecting coconut trees for sap collection process, at Annato Farm in Brgy. Talim, Lucena City, Quezon.
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2. Value chain
During the consultation workshop, the participants identified the process by which
the coconut sugar is processed (Figure 4). First, the coconut sap is collected from the
coconut flower. One tapper handles 60 trees and collects sap 4 times a day at 4 hours
interval. The collected sap will be cooked into syrup and granules at the farm level (small
scale). The suppliers of coco sugar bring the product to Green life in sacks for the branding.
Green life acts as consolidator of coco sugar. Green life supplies to traders and some
retailers.
Figure 4. Process flow of coconut sap sugar
In the case of Alabat, the sap collection is done by a hired stay-in laborer and they are
paid Php 60/li. The syrup production is also done at the farm level because of the
exceedingly short shelf life of the sap. Usually, the tapper’s wife is the one cooking the
sap into syrup and they are paid Php20/li. The syrup is brought to the Alabat Coco Hub for
further processing into granules and also for packaging and labelling. In this case, the LGU
Alabat acts as consolidator of coco sugar. The workers in the Coco hub are contractual on
job order basis of the municipality of Alabat.
The government agencies assisting the actors in the chain are PCA and DTI. PCA
provides training on production and processing including operation of equipment before
distribution, while DTI provides labelling and packaging support. Local Government Units
(LGUs) does not keep track of the number of beneficiaries or the reach of various projects
or does not implement any strategy for M&E of project effectiveness.
A. Production
It was seen as a general scenario for all data sources that the lack of high-yielding
dwarf varieties impedes production of raw materials for coco sugar. In addition, the
analysis of TRAVERA revealed that current production are only 1.5 to 2.0 L/tree which is
way below the optimized yield of 4 to 5 L/tree. Moreover, production is generally impeded
by collection of sap in old trees that generally produce low toddy. Production is also
affected by the lack of skilled tappers. It was indicated that trained tappers are often pirated
20
by other producers which bring a ‘solution-to-one-problem-to-the-other’ scenario. This
means that an agency trains skilled workers only to lose them because of higher offers
and/or better working conditions, in general. This creates a problem that in order to solve
one corporation’s lack of skilled workers, they need to pirate from another, thus creating a
cycle of lack of skilled workers. However, in areas where skilled tappers are available,
there is a general lack of output-oriented laborers. In Alabat, Quezon, for example, tappers
tend to favor job orders because of relatively low and also intermittent income from
tapping activities. Continuous production and price demands are also affected by the
exorbitant prices of certification that affects the production of certified products.
Production areas are also static and even declining, with only 3.5 million hectares,
alongside an annual growth in demand of 2% to 3%. General prices are also fluctuating
which was valued at PhP 12/li of sap. Current management practices are also not GAP
certified which denoted that there is 150% lower nut yield because of non-application of
fertilizers. GAP certification entails external audits and the range of activities for
certification was not covered in the study. This finding was mentioned once by a
respondent and further elaboration was not provided.
The main challenge for coco sugar production identified is the fiscal requirement in
putting up a processing facilities needed for expansion. The participants emphasized the
need for good processing facilities to ensure the quality of the product. The producers also
need adequate cash to pay the daily wages of tappers. Another challenge for the coco sugar
industry is to meet the minimum requirement for export. At present, the local suppliers
cannot meet the minimum volume requirement which is around 10 metric tons.
B. Processing
In terms of processing, current scenarios are well-beyond optimized parameters.
Efficiency, costs, and capacities to production are generally below set “best” scenarios. In
coco sugar producing areas, the main concern is the availability of technology that can
mechanize collection of sap but would not affect quality. Current practices are still
rudimentary and production is generally manual. It was mentioned that Korean designed
machines were introduced for greater sap recovery, but it also leads to spoiled sap because
of contamination from residues in the pipe. In addition, there is a certain peculiarity in sap
collection because production into syrup must be done within continuous four-hour periods
throughout the day (i.e. maximum of five (5) collections per day). Some tappers start very
early, at 7:00 AM, but are generally affected by the increasing temperatures in farms,
thereby, opting to earlier or extended collection periods throughout the day. It was also
reported that processing are almost done per liter of sap collected. Recovery and
granulation procedures are also done manually, usually by women in the community,
which has low yield. Moreover, the focus of producers, especially those that are small-
scale, is for financing of mechanization/modernization of instruments used for the
production of coco sugar. It was noted during the information gathering that good
programs and projects of the government for the sector is often lost due to a sustainability
issue – inability of beneficiaries to maintain machinery and sustain production. There is
also fragmentation of technology which could be standardized.
21
Figure 5. Coconut syrup delivered for processing to coco sugar at the Alabat Coco Hub, Alabat, Quezon
C. Marketing
In terms of marketing, linkage, promotion (i.e. branding and positioning), and product
development are key elements for the product. In recent years, the Department of Trade
and Industry (DTI) had been striving to be proactive in engaging stakeholders and partners
in developing only in the packaging of products that meets certification standards. These
included record-keeping and general data management to comply with certifying bodies’
requirements. However, the vital factor contributing to low appeal of the product is due to
the highly niche-based (or targeted, narrow, specified market; i.e. consumed only by select
sectors with knowledge of the product, willingness and capacity to pay) and export-
oriented (i.e. product is developed for export and has not been marketed for local
consumption) marketing strategy While the latter is beneficial to the country, domestic
consumers have low awareness of the product because current markets only caters to select
sectors with access. Product promotion is also currently supported by various government
and non-government sectors, but there was a need for market-related policies (i.e. Free
Trade Agreements) to be streamlined to expand market awareness and encourage greater
participation. Current state of production are generally below volume requirements which
also inhibit the marketing aspect of high-quality products. This is also related to the general
quality variability because of the lack of standards of production, which translates to
inconsistency of marketable products. There is also weak industry association which can
also lead to the lack of consolidators and, ultimately, exporters.
3. Employment needs
General employment needs for the production of coco sugar is concerned primarily
on the production aspect of the value chain, particularly employment needs for
tapping/collection activities. This is almost always true for labor-intensive and process-
oriented industries with multiple products/by-products. It was attributed that the general
need for employment in this aspect is because of the decreasing trend of engagement in
agriculture-related professions and the increasing preference for office-based jobs. The
latter is generally perceived by local communities as more stable and avoid the drudgery
of intensive manual labor or working in the field. There was also employment needs in
processing of products, but this is generally impeded by the lack of machinery or
mechanized procedures. The same perception of manual labor is perceived in this scenario.
22
In terms of the skills, the cook can be easily trained compared to tapper. According
to the workshop participants, the challenge of the coco sugar production is the training on
tapping of coconut inflorescence such as the angles of the tap and optimum time to tap.
However, skills development for tappers may be faced with difficulties because their
schedules on meeting the demands for processors. The participants identified the use of
dwarf variety to reduce the sap collection challenges. A consistent challenge for coconut
sap sugar producers mainly revolved on the collection of toddy, particularly the risks
involved in harvesting sap which is done four (4) time per day. In addition, areas for
production should also be identified and these areas should be prepared for the utilization
of the dwarf variety which provided higher toddy and avoids the risks of climbing taller
palms. Meanwhile, there are no problems cited in processing/cooking as the formulation
of granules depends on the quality of the sap collected. One cook can cover a hectare of
trees.
Figure 6. Coco sugar filtered before packaging by workers at the Alabat Coco Hub, Alabat, Quezon
23
3.1.2 VCO
1. Market trends
Current estimates for the industry of VCO is the highest among all coconut
derivatives valued at US$ 40.5 M. In the last five to six years, the production of VCO is
constantly fluctuating in volume but has seen highest yield in 2015 at 64,316 MT before
declining in 2016 to 41.09 million MT and reaching the lowest point of 27.72 million MT
in 2017. However, since its lowest production point, the industry is currently recovering
with values reaching to 39.02 million MT in 2018 (28.95% AAGR). This trend is also
mirrored by its value except that it has seen no recovery yet and continued to plummet
from its highest point in 2015 at US$ 279,674,000 to its current lowest of US$ 40,487,836
in 2018 (-71.94% AAGR). VCO produced in the country is currently number one in the
world accompanied by Indonesia and Sri Lanka.
A. Demand settings
Global market for VCO was valued at US$ 2.1 B in 2016 and is projected to increase
by 100%, at US$ 4.2 B by 2024 (Global Institute for Tomorrow, 2017). Current markets
for exports of the product are found in the four market regions including: 1) Asia-Pacific
– Australia, China, Singapore, and South Korea with 38% shares of exports; 2) Europe –
Belgium, Germany, Netherlands, Sweden, and United Kingdom with 28% shares; 3)
Middle East-Africa – United Arab Emirates and Dubai with 12% shares; and 4) The
Americas – Canada and United States with 22% shares. However, prices had been
declining from $3,000/MT in 2011 to $2,522/MT in 2017. Current domestic demands for
the product is generally undocumented, but existence of multi-billion food and cosmetics
companies in the country would denote that domestic use is present. In addition, demand
for VCO is also propelled by conscious efforts to eradicate chronic diseases such as
diabetes and stroke. Moreover, the call of cosmetic lines to for bio-safe products are also
motivators for continued production.
There is still a growing demand globally for VCO. To tap the growing demand, VCO
from the Philippines can be marketed as having the highest lauric acid characteristics of
the coconut compared to other countries.
Foreseeing the growth in the VCO industry, there is a great availability of possible
employment in the Philippines due to its current high unemployment rate. In addition,
International Organization is willing to extend assistance to the Philippine Coconut
Industry. Quezon Federation and Union of Cooperatives is granted with a Shared Service
Facility Set-up by the World Bank.
B. Supply settings
Market trends in the country for production of VCO is currently at around 4.0 M
MT/year. In the report of Castillo (2019), producers and processors of the product in
CALABARZON has the rated capacity of 33,215 MT/month and distributed in the
Province of Laguna (6), Quezon (7), and Rizal (1). Most of these producers are found in
Quezon Province including the highest rated producer, Primex Coco Products, Inc, with
30,000 MT/month output. The lowest output is 10 MT/month all of the 11 out of the 13
entities are producers that supply domestically and internationally. The other two are
service agent and trader-exporter.
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2. Value chain
The Value Chain for the VCO follows the Recommended Value Chain Business
Model from the presentation of TRAVERA study results on March 13, 2019 at ILO-
Philippines, Makati City (Figure 6). Processor-exporter has a backward integration with
the export market to control supply and volume as well as quality and comply with
standards. It employs a central processing plant (usage of centrifuge machine) for
standardization/quality. Processor-exporter encourage intermediate processing for supply
control. Farmers/intermediary processors forwards integrate in order to have a more stable
client. Farmers/intermediary processors organized themselves into production clusters to
have a greater trade advantage.
However, unlike the recommended Value chain of TRAVERA study, the VCO value
chain for the respondents in Laguna and Quezon does not include broker-exporters (Figure
7). There is also no middlemen or trader encountered. But, there is a consolidator which
sells its own products. The presence of hired farmer-caretakers was also noted.
Figure 7. Recommended value chain business model for VCO (by REECS, presented during the
Validation Forum of TRAVERA on March 13, 2019 at ILO-Philippines, Makati City)
The Value Chain for VCO involves the following stakeholders: coconut producers
and/or intermediate processors, consolidators, tertiary processors-exporters and
wholesalers/retailers. The key stakeholders in the value chain are the processors-exporters
which produces the marketable VCO product. The processors-exporters in this study
include Amazing Foods Corp. (Amazing Foods), Primex Coco Products, Inc. (Primex),
Greenlife Coconut Products Philippines (Greenlife), Pasciolco Agri Ventures (Pasciolco),
25
and CocoPlus Aquarian Development Corp. (CocoPlus). Most of the VCO exported are
produced by integrated processors, such as Primex and Peter Paul, while the least volume
for export are exported by tertiary processors who use farm-based fermented VCO as raw
material.
Since export market orders in bulk, processors-exporters are forced into backward
linkaging in order to comply with volume requirement. Backward linkage allows the
assurance of supply and price competitiveness from village-level or micro-scale coconut
producers. Also due to high quality standards of the export market, coconut producers
and/or intermediate processors are required to comply with the requirements of the
processors-exporters. Processors-exporters ensure the quality of raw fermented VCO from
each intermediary processor. As tertiary processor, raw fermented VCO undergoes
standardization under the centrifuge processing.
Figure 8. Value chain of VCO manufacturing firms in Laguna and Quezon Provinces.
A. Production
Raw material used in the production of VCO is coco meat. In recent years, the
challenge of the sector is obtaining the appropriate volume and quality of inputs to sustain
domestic and global demands for the NTCPE. Production of VCO, similar with that of
coco sugar, is affected by the lack of financing mechanisms for small-enterprises as well
as the decline of skilled workers for collection and recovery of coco meat.
B. Processing
Production processes in VCO use manual (i.e. deshelling and paring), manned
mechanized wet processes (i.e. shredding/grating, extracting, and filtering), and dry
processes (i.e. drying, desiccating, extracting, and filtering). These processes require a lot
of fundamental labor training and skills training to bridge the gaps of varying qualities and
making the entire production cost-efficient. Current processing to enhance yield of VCO
uses centrifuge but are of limited use because of the costs entailed in purchasing and
maintaining the machinery. In addition, the skills required for maintenance should also be
26
focused for prolonged efficiency and sustained production. VCO production can also be
considered to have the simplest processes among the NTCPEs but the skills required to
maintain quality are paramount to adhere to prevailing local and international standards.
Training of workers for VCO should maintain the following based on the DA
Administrative Order No. 2005-01: 1) identify characteristics – composition of fatty acids
using Gas Liquid Chromatography; 2) quality characteristics – odor (natural coconut or no
rancid odor), color (colorless and sediment-free), and taste (no rancid taste); properties (i.e.
moisture and volatile content, lauric acid%, peroxide value, food additives, contaminants
(max matter volatile at 105°C), heavy metals (Fe, Cu, Pb and As); 3) hygiene; 4) labelling;
5) methods of analysis and sampling; and 6) compliance and specification – provide the
lot number from which batch the samples were drawn. These processes are independent of
what type of extraction method is used with the limiting factor to method being the capital
of the producer.
Skills on sorting and grading especially on VCO (food grade, cosmetic grade, etc.) is
needed in order to attain high quality standards of both local and international markets.
Figure 9. Manual deshelling, paring of coconut, shredding/grating of coconut meat at Alex and Lizel VCO, Sariaya, Quezon.
Based in the interviews and FGDs conducted among respondents in Laguna and
Quezon, there are two ways to extract virgin coconut oil and these are through the Dry and
Wet Processes. According to PCA’s VCO production manual, the dry process has the
highest oil recovery rate at 88% while the wet process has yield/recovery rate of 17%. The
prior process is employed by Primex Coco Products, Inc. While the Wet process is further
classified by the processes: Centrifuge and Fermentation. The previous process is being
used by Greenlife, Pasciolco, and Cocoplus.
Mamala 1 MPC, Alex and Lizel VCO, and Amazing Foods make use of the cold or
fermentation process. The fermentation process is considered an intermediary processing
of VCO for the products of Greenlife, Pasciolco and Cocoplus. On the other hand, Quezon
Federation and Union of Cooperatives (QFUC) acts as the consolidator of de-husked
coconuts and tolls at Cocoplus in its centrifuge-processed VCO.
It is a must to note that QFUC is a consolidator of raw material for VCO production.
Its ‘Primero’ VCO products undergoes the centrifuge under toll processing with Cocoplus.
Mamala 1 MPC is a supplier for QFUC. Alex & Lizel VCO is a supplier for Greenlife. It
is also worthy to note that Amazing Foods’ product line ‘Sta Maria’ is a refined fermented
VCO which not subjected to any heat or tertiary processing.
27
C. Marketing
In terms of marketing, VCO is price competitive because current processes meet the
meticulous global standards. However, the supply of VCO is currently static, if not
declining, because of the erratic supply that will sustain production. Most of the producers
also have very limited rated capacities that cannot meet the demand. Currently, the markets
for VCO are varied but can also be niche-oriented, particularly with cosmetics and
aesthetic products of firm-level enterprises. Wide-scale consumption of the product, as
stated in the different information elicitation activities, can be augmented if trainings and
skills development for promotion and marketing of VCO will also be implemented at
smaller production scales. Technical and administrative trainings and skills development
in putting up databases or simple production documentation should also be employed
because these would facilitate fervent marketing of the product While some firm-level
enterprises conduct their own trainings to address these gaps, there is still dependence on
PCA to determine the appropriate agency to provide these trainings.
The primary market for VCO in the Philippines is in the export sector due to the
growing demand globally. The existing export markets of the firms are Europe, Middle
East, Canada, US, Malaysia, Singapore, China and Japan.
Although there are an existing export markets, some firms (like Greenlife, Cocoplus,
and Pasciolco) still tend to gear towards local distributorship. Greenlife and Cocoplus
already tied-up with Go Lokal Stores. Products of both Greenlife Coconut Products
Philippines (labelled as GreenLife Home of Coconut Products) and Pasciolco Agri
Ventures (labelled as Quezon’s Best Organic) are sold in retail by businesses in Quezon
Province.
In the local market, VCO is envisaged be promoted as a multi-functional daily
product (as food, supplement, cooking oil, etc.) in order to increase per capita
consumption. The producers are in a consensus that promotion of the VCO must be backed
up by ‘science’, i.e., research and testing for its nutritional and health advantages.
3. Employment needs
In the process of VCO production, labor is most important during the production of
coconut, deshelling and paring of coconut meat. After paring, all other stages in the
processing includes machineries or equipment with 1 to 2 operators.
Currently, the seasonality of the production is directly proportional to the seasonality
of work. This is because VCO must be manufactured in bulk which is also dependent on
the orders. Seasonality of work makes the payment option usually on a per piece basis.
Payment range from 45 to 60 centavos per piece depending on the labor process
(deshelling, paring, shredding/grating). In Primex, the payment for labor is measured per
day.
Due to seasonality of work, companies, even one as large-scale as Primex cannot
accommodate regular manual laborers. This somehow result in high turn-over of laborers.
Often, laborers choose other occupation/work which are relatively stable or with higher
income or with less demanding tasks. This does not augur well in terms of job security on
the side of the worker and training costs on the viewpoint of the producer.
Despite all these, there is still a high employment opportunity in the VCO industry
particularly during the manual stages of production (i.e. deshelling and paring of coconut
28
meat). These stages do not require high level of education but are substantially needed by
producers at a regular basis. In large scale integrated firms such as Primex which produces
VCO and desiccated coconut, more manual laborers are needed due to scope economies.
Thus, more employment can be generated for local communities with members that do not
have high educational attainment.
Skills development is done within the organization/firm. There are no trainings
provided in skill development that the firms know of. Research centers of PCA are not
intended/focused for business venturing. DOST, through its Small Enterprise Technology
Upgrading Program (SETUP), provides assistance to Micro-Small and Medium
Enterprises (MSMEs) to address their technological requirements and limitations to
improve productivity and efficiency. Before the technology is transferred, the recipient
undergoes training on how to use the machine/equipment. Under this program, five (5)
strategies were provided including: 1) Provision of Technology – needs assessment and
sourcing of technology, technology acquisition, S&T training, and consultancy and
technical advisory services; 2) Product Standards and Testing – product development with
DTI-Bureau of Product Standards and Product testing and enhancement of testing
laboratories; 3) Packaging and Labelling – development of functional designs for packages
and identification and development of suitable or alternative packaging materials
especially from indigenous materials; 4) Database Management and Information System
– list of available technologies, list of S&T experts, list of testing laboratories including
available testing services, and development of website for MSMEs for product promotion
and access to information; and 5) Linkaging and Networking – raw materials sourcing,
marketing, financing and equipment design and fabrication. Applicants are provided with
the necessary trainings depending on which strategy is best suited for them.
A recipient of the SETUP assistance was Greenlife, which successfully utilized the
technological assistance provided to them according to DOST. However, DOST SETUP
is no longer applicable with the current business model of Greenlife nor is it appropriate
for business venturing given that the focus of SETUP is more on technology. The owner
of Greenlife clarified during the October 21, 2019 Multi-Stakeholders’ Forum that because
of the rapid changes in technologies and opportunities, DOST has to undertake SETUP II
which is a revision of the first SETUP. Prior to the implementation of SETUP II, a dialogue
between DOST and training recipients should be conducted to assure that interventions to
be provided will fit the needs of future recipients. In addition, current trend by large scale
processors are located in places such as Sorsogon City (Peter Paul); Brooke’s Point,
Palawan (Cardinal); and Gloria, Oriental Mindoro (All Coconut Organics). These areas
provide a good opportunity for skilled workers. Moreover, Axelum in Medina, Misamis
Oriental with a rated capacity of 800tons daily for coconut water, coconut milk, coconut
cream and desiccated coconut provides good employment opportunities for the local
population.
3.1.3 Coco coir
1. Market trends
Current global and market trends of coconut husk-based products are continuously
increasing both in volume and prices from 2011 to 2017. However, the country is not one
of the NTCPE’s top producers as this is dominated by Sri Lanka and India. Current global
shares are at 49,041 MT tons and valued at US$ 4.451 M.
From 2011-2018, an average of 17,754 metric tons of coco peat/dust were exported
annually. The biggest volume exported equivalent to 93, 589 M metric tons was recorded
29
in 2018. In terms of value, the highest was recorded in 2017 at 2.03 million US dollars
FOB. The country’s biggest market of coco peat/dust since 2011 is China with 86.8 percent
share of the total volume exported annually. It was followed by South Korea (5.5%),
Malaysia (2.5%) and Taiwan (1.7%). Other market destinations are Japan, US, Singapore,
Hong Kong, Netherlands and Liberia.
Similarly, the coco husk cubes export performance and market destinations from
2011-2018 is almost the same with the coco peat, with China as the primary market having
87.1 percent share of the total export volume. For the period 2011-2018, the average
volume of export per year was recorded at 2,515 MT. The highest volume of exported coco
husk cubes was registered in 2018 which equal to 13,314 metric tons valued at 1.6 million
US Dollars FOB.
Another coir product exported is the baled coir with an average volume of 22,015
metric tons exported from 2011-2018.The highest volume of baled coir exported was in
2018 which totaled to 52,403 metric tons while the highest value was registered in 2016
which reached 12.58 million US Dollars FOB. The primary market destination of baled
coir export from 2011-2018 is the United Kingdom with a recorded total volume of
4,659.93 metric tons or 33% share of the total export of the country. Other market
destinations are Japan, China, Spain, Malaysia, South Korea, Singapore, India, Egypt, and
Taiwan.
Another coir export products of the country are coco twine and coco pads/liner
showing an average volume of 447 metric tons and 89 metric tons exported foremost to
the USA from 2011-2018, respectively.
A. Demand settings
China is consistently the major importer of husk cubes, baled coir and
peat/dust from 2011 to 2018 (PCA, 2019). However, the United States is the major
importer of coco twines and pads/liners.
B. Supply settings
Based on PCA’s monitoring of production, CALABARZON produces 11,886.87 MT
of husk and 3,566 MT. Rated capacities for husking of coconut are currently at 80,000
husks/day in the region. Proposed initiatives to increase supply of coco coir in the region
include PCA initiatives in the Coco Hub project, capacity development through the
KAANIB Enterprise Project with 24 M equipment allotment to 19 CBOs, and capacity
enhancement through regular monitoring and training of CBOs on coir processing and
marketing and entrepreneurial skills development. These are also motivated by skills
development and training for the production of bio-fertilizer from coco peat wastes and
use of the wastes for waste water management system.
2. Value chain
Figure 6 illustrates the value chain for coco coir/peat based on the KIIs and FGDs
with respondents from Laguna and Quezon. Husks are bought either directly from farmers
or from traders. Using a machine, the husks are decorticated into fibers while coco peat is
produced as by-product. The fibers are then baled as coco coir using a machine while the
coir dusts are collected and made into peats. For product improvement, secondary
processing is done to produce coco twines, bio logs, geo nets and other products such as
plant pots and liners, and mats. Basic products such as baled coir and peat are marketed
domestically and internationally. Secondary processing products are also sold both in the
30
local and global markets. However, it was mentioned that due to the stringent export
requirements and the high demand in the domestic market, the firm-respondents prefer to
sell locally.
A. Production
General production of coco coir is currently utilizing decortication of husks. A critical
component of fiber production is drying and baling. There is a need to supply skilled
workers for optimal recovery and sustain supply of inputs. The process is laborious and
production is impeded by seasonality of income. It was noted that, while there are
standards set for coconut fiber (coir) and coco peat, it is up to the market (whether domestic
or global) to provide their own standards based on their application. This is specifically
true for export markets wherein buyers have their own standards, which are stipulated
within the contact of Purchase Order. For coco coir and peat, it was mentioned that drying
standards are higher in the international market which require 20% moisture content (MC)
for coco coir and 18% for coco peat. This is best achieved by mechanical drying to achieve
the required moisture content but can be expensive to operate and would require higher
fiber volume feeds before economic levels are reached. In addition, specifications may
involve site requirements such as pH and slope for the installation of geo-net mats, to name
a few. Meanwhile, the local market is not strict and is contented with whatever level of
drying is attained through the use of a machine.
Figure 10. Decorticating machine and solar drying of coco coir at Wua Yei Enterprises in Victoria, Laguna.
B. Processing
Twining of coco coir to produce the raw materials for handicrafts is generally done
manually. Mechanization of the process of twining the product is generally needed by the
sector to perform better in domestic and global markets in reaching volume quotas.
Development of technology for twining has not been met and the process remains to be
done manually.
However, should the process be mechanized, labor is still needed and workers should
be trained for machine operation including feeding husk and uniform thickness of twines.
Repair and maintenance should also be included in the training. Even with the presence of
twining machines, it is not practical for manufacturers to mechanize twining since labor,
mostly female and elderly, is readily available.
In addition, the products are considered textiles that are also used as raw materials for
other products such as handicrafts. Skills development in the processing of coco coir into
twines is also needed by the sector because of the general older age groups of those engage
31
in the industry. The challenge is to entice younger generation to engage in coco coir
twining.
Figure 11. Value chain of coco coir/peat based on Key Informant Interviews and Focus Groups Discussions, Laguna and Quezon, 2019
C. Marketing
Promotional activities are needed to streamline domestic and international marketing
of the product. At present, expanding markets is limited by the lack of knowledge on the
domestic and international demands that also impede the determination of the skills
required for better marketing of coco coir based products.
Current markets of coir, relative to the other NTCPEs are smaller. Moreover, current
demand for coco coir based products are generally limited and sporadic. Thus, there is a
need to further promote the use of coco coir based products into a more multi-functional
products to expand and create new markets.
Based on Key Informant Interviews, there is a huge demand for coco coir in the
international market except there is a problem in meeting standards. On the other hand,
local markets are readily available for coco peat/dust due to its high demand for
horticultural purposes.
3. Employment needs
Employment opportunities particularly for twiners and weavers in this industry are
related to the available markets. Based on interviews made, there is a demand for twiners
32
and weavers. Moreover, twines and nets can be developed into more handy products that
will require further skills training on design and product refinements.
Figure 12. Village-level twining of cococoir of Tropical Prime Coir Corp. at Unisan, Quezon.
Figure 13. Village-level weaving of geonets at Tropical Prime Coir Corp., Padre Burgos, Quezon.
Operators for the decortication and baling machines are also needed in the industry.
For large exporting firms, a tractor operator is required when collecting and placing the
fibers into a confined area. Moreover, manual labor that will collect the fibers and peat are
likewise necessary. For those firms that will venture further into the production of pots,
plant liners, etc., designers are essential. Manual labor for further drying of coir and peat
(given that export markets require them to be dried) needs to be hired but only on a seasonal
basis. The main challenge is the logistics needed to collect the husks from farms going to
33
the decorticating site. Due to the low price of husks, farmers wait for the processors to
collect the husks. The consolidator needs to schedule collection for maximum load,
meaning the husks collected should be at least a truckload worth.
Figure 14. Bio-logs making at Tropical Prime Coir Corp., Agdangan, Quezon.
3.2 Firm level characteristics and business capabilities
At present, the business capabilities of the sectors are generally limited to those that
produce the NTCPEs at a commercial scale operation. However, with the results of
information gathering, figures on the characteristics and business capabilities are at best
lacking or generally unknown. Currently, PCA and DTI does not have any published
manual or output that will determine the firm level characteristics of the NTCPEs.
3.3 Gaps in business capabilities
There is a gap in the business capabilities of firms since no established benchmark of
the NTCPE industry in the Philippines has been developed. Based on the FGD, market
research, research and development, credit line, quality management, meeting health and
safety standards, etc. are some of the business capability gaps for the export-market.
For production, gaps are generally focused on the lack of skilled workers for manual
labor. In addition, selection of varieties for planting, fixed inputs, management practices
and capital are generally those in need of enhancement. Trainings for selection of high-
yielding varieties must be the first initiative of the businesses involved in NTCPEs.
Management practices to control pests and diseases are also generally lacking, if not
rudimentary. Integrated pest management and fertilization are required to ensure quality
inputs for the production of NTCPEs. On the other hand, fixed inputs, such as land, and
financing are cross-cutting concerns for further enhancement of business capabilities.
In terms of processing, it was a general concern for the three NTCPEs to have a more
mechanized but cost-effective processes. There is also a need for skills training in all
aspects of operation and processing to ensure that quality meets standards. Businesses
should also focus in enhancing skills of current workers through self-initiative trainings or
by sending them in government provided skills development workshops. Trainings should
also cascade to line workers from managerial levels.
34
For marketing, business capabilities are generally sufficient but there is a need to
increase promotional capabilities, especially at the domestic level. It was emphasized by
PCA that the business involved in NTCPEs are generally struggling to meet domestic
markets because of poorly promoted products. Product developments are also limited to
those with the capacity to improve packaging and those that can attend trainings.
3.4 Institutional mechanisms
Analysis of the institutional mechanisms also conformed to the supply chain
structure. Based on this approach, PCA leads all government institutions in ensuring that
all coconut-based products meet the national thrusts. PCA, in coordination with DA and
DAR, also provide for the planting materials, fertilizers and financing mechanisms in
ensuring that there is enough input supply or raw materials. At the processing level, DA-
ATI, DOST and coco-based National Government Agencies (NGAs) are at the forefront
of ensuring that trainings, machineries, and processing capabilities are provided to the
producers of various NTCPEs. Finally, DTI, NGAs and Coco-Hub Partners ensure that
there is continued product development and promotion for the business side of the
NTCPEs. Other relevant stakeholders are the farmers, tappers, laborers, processors,
consolidator traders, exporters and retailers to keep the entire industry functional. Besides
government agencies, private organizations as well as some of the firms involved in the
manufacture of VCO, coco sugar and coco coir had been providing trainings to enhance
skills of workers.
35
3.5 Scanning the business environment: problems,
issues, and opportunities
Although the NTCPEs are generally performing well at the global market, one of
the major problems of the NTCPEs is meeting and sustaining the demand and supply,
respectively. Currently, NTCPEs volume of production cannot supply both domestic and
international demands because of the lack of cost-efficient and high-yielding production
and processing capabilities. On the other hand, promotion capabilities in NTCPEs are
limited to those with mechanism to develop their products and avail trainings. It was also
floated that the trainings provided for small-scale enterprise largely focus on enhancing
labor and technical skills but generally lacks the promotional, managerial, and marketing
skills for products to be streamlined. However, opportunities for the business sectors
related to NTCPEs are currently expanding due to the change in attitude of consumers in
choosing healthy and organic products. In addition, government support for the
establishment and development of the products are generally present but reach should be
expanded for small-scale enterprises. There are also no safety nets for social and economic
aspects of the NTCPEs. This was drawn by the lack of measures to circumvent the impacts
of seasonality in all three NTCPEs, one of which is the periodic demand for skilled labor.
3.6 Skills development for NTCPEs
Determining Skills Development for the Coconut Industry: Review of Literature and
Salient Results of the Study
Coconut as a versatile crop is a source of raw materials for various products and
congruently, livelihood. Various GOs and NGOs programs geared towards liberalizing
coconut farmers from producing copra alone and achieving higher value for their produce
is being introduced since 1990. One intervention that had been conducted by both the
private and public sector is the implementation of a wide array of trainings or skills
enhancement measures.
Different government agencies had conducted programs and projects on capacity
development for the coconut industry at the farm or village level but most of them are
geared towards increasing knowledge of farmers on new production technologies so as to
increase farm productivity. The PCA, for instance, conducts training on new farm
technologies in line with its existing projects which include Coconut- Coffee Based
Enterprise Development Project (COCOBED); Coconut Intercropping Project (CIP);
Coconut-Cacao Enterprise Development Project (CCEDP); and Coconut Fertilization
Project (CFP). The Sustainable Certified Coconut Oil Production (SCNO) Project which
was implemented by the PCA together with the Agricultural Training Institute (ATI) and
Bureau of Agriculture and Fisheries Standards (BAFS) developed a training curriculum on
coconut farming as a business enterprise. Implemented in Southern Leyte, Sarangani and
South Cotabato, the curriculum developed a farmers’ workbook wherein farmers record
the various farm technologies/practices they adopt and their corresponding income and
expenses.
The Department of Agrarian Reform also conducted skills development on new
technologies in line with the Agricultural Extension Service component of the Agrarian
Reform Community Connectivity and Economic Support Services (ARCCESS). Local
government units have also conducted trainings on coconut technologies as part of their
extension activities. TESDA, another government agency mandated to conduct trainings
on skills enhancement mentioned in the STED Round Table Discussion (RTD) held on
October 8, 2019, mentioned that at least for Region IV-A, they have not developed any
curriculum specifically for the coconut industry.
36
Capacity building or enhancement had also been extended specifically for non-
traditional coconut products such as coconut sugar, virgin coconut oil and coco coir. These
capacity building activities are usually anchored on various projects and programs that
government entities administered. DOLE Region IV-B in 2017 implemented the coco coir
processing under the Integrated Livelihood Program (ILP) or Kabuhayan Program to
provide livelihood opportunities to 3,000 workers who were affected by the suspension of
two mining companies in Palawan. The project provided assistance through training and
equipment for coco net weaving. Geonets from the newly formed 4 associations were
contracted with other mining company together with DPWH. Prior to ILP, DOLE
implemented the Sustainable Agricultural Production which was comprised of community
seed banking, production of cacao, coconut, glutinous rice, banana and ube and skills
training on Coconut Products & By-Products Utilization. These were held in Jagna, Bohol
and Pamplona, Negros Oriental, in 2014. While in 2015, Bayawan City Coconut Farmers
Multipurpose Cooperative (BACCFAMCO) in Bayawan City, Negros Oriental became
beneficiary of machinery for coconut by-products processing (decorticator, weaver, etc.)
production/coco fiber processing and marketing.
Several village level coconut processing plants (VLCPs) and/or facilities were given
by PCA to different farmers’ cooperatives/associations in order to augment their income.
But due to various problems particularly marketing, financial, technical and even
management, most of these VLCPs did not prosper. These were mentioned in the paper of
Divina Bawalan (2003). She emphasized that micro and village scale coconut processing
enterprises should always be guided by the market demand and the value of the product
reinforced by sufficient coconut supply that will match the appropriate scale of production
and the adoption of suitable processing technologies. She also highlighted that level of
technology to be adopted should be corresponded by the capability of available manpower
to ensure sustainability. The availability of skilled manpower and/or worker who have the
necessary aptitude to be trained in performing the various processing steps, equipment
operation, repair and maintenance is crucial in coconut processing enterprises. Moreover,
skills needed for managers to sustain a village level coconut processing enterprise are
entrepreneurial/business management skills specifically business planning,
plant/production operation and market identification skills while skills needed for
workers/laborers are basic operation, repair and maintenance of plant/processing
equipment, machineries and facilities (training usually provided by supplier of
machineries/equipment upon procurement and installation);
Similarly, capacity and skills development of farmers and farmer’s organizations or
nucleus-estates were also emphasized in the coconut road map published by NAPC in
2016. It was clearly explained, that “farmers’ organizations should learn the value chain
orientation that will provide them important market information which will eventually
guide them of the current gaps and potential opportunities in the business environment
where they can add value to the coconut products”. To secure adequate supply of skilled
laborers for various agri-business enterprises like VCO and coconut sugar production,
coconut coir twining and weaving, appropriate trainings should be done in partnership with
TESDA. Skills training on marketing, sales, business planning and inventory management
is likewise deemed necessary to ensure sustainability of nucleus-estate enterprises.
Bawalan (2003) also cited that members of cooperatives/organizations must undergo rigid
training on value formation, cooperativism and processing of the desired products.
Alcantara (2013) also reviewed the national coco coir roadmap of DTI IV-A and
mentioned that the market development and promotion strategy interventions for domestic
market includes: (1) institutionalization of a market information network system
(generation, processing, continuous updating and dissemination -to operators at all levels
of the VC-of market and other related info); (2) policy advocacy to invoke widespread use
of coco coir products, i.e., government projects, private buildings, use in other industries;
37
(3) facilitation for market matching between community enterprises and big-brother
exporters, contractors; and (4) capacity building on market negotiations.
For coco sugar, Masa (2012) recommended that quality control supervisors should be
trained on visual examination of sap since this is crucial in determining sap suited for sugar
and other allied products like sap syrup, sap spread or saps drinks. Similarly, in the KII
with Greenlife, it was mentioned that one skill needed for the processing firm is the ability
of distinguish and grade VCO visually into food, cosmetics, etc. since having it chemically
analyzed is very costly.
Several production and processing manuals developed by government and the private
practitioners for the three NTCPEs provided practical knowledge and valuable skills in all
areas of producing VCOs, coco sugar and coir fiber from choosing the best raw material
to final packaging including quality control, good manufacturing practices and record
keeping. Further processing of residual by-products and downstream products were
likewise included in the manuals (i.e. soap, culinary oil, massage oils, skin care products,
coco-vinegar, sap syrups, etc.). Implementation of manuals differs depending on the
training design and trainors. In two events, the “teaching by showing and learning by
doing” was employed in the actual implementation of a VCO production manual for micro
and village-scale processing in the FAO sponsored trainors training with the Thailand
Institute of Scientific and Technological Research (TISTR) in Thailand (Bawalan &
Chapman, 2006) and training courses on VCO processing and related matters in Fiji
(Bawalan, 2011).
Meanwhile, the Pasali Philippines Foundation, an accredited Extension Service
Provider of Department of Agriculture’s Agricultural Training Institute (DA-ATI) Region
XII conducted skills training on Coconut By-Products Processing in Sarangani province.
The training utilized lecture series and practicum on VCO production process, coco-based
soap making and vinegar production. Basic Costing, Operation and Maintenance
Procedures and proper use of Personal Protective Equipment were taught. The training was
attended by 28 rural women from Kiamba and Maitum as part of the social transformation
and women empowerment with the end goal of promoting coconut by-products to increase
the income of coconut farmers (Pasali Philippines Foundation, 2016).
The Department of Science and Technology-Negros Oriental Provincial Science and
Technology Center (DOST NegOr PSTC) in collaboration with Dumaguete City Credit
Cooperative (DCCO) Multipurpose Cooperative and PCA conducted the skills training on
coco sap sugar production (DOST Region VII, 2018). Attended by 35 men and women’s
groups from Sibulan and Dumaguete City, participants were trained on basic coco sap
sugar production and business venturing. Participants were able to sell packs of coco sugar
ensuing them additional income right after the training.
Another private entity engaged in coco coir and geo-textile production is the Coco
Technologies (CocoTech). It is a privately-held enterprise in the Philippines that produces
geo-textiles from waste coconut husks (Ganchero, E. & Manapol, P., 2007). It pioneered
the application of bioengineering using cocofiber nets (coconets) in slope protection, river
and shoreline rehabilitation and erosion control in the Philippines and other countries in
Asia and Europe. CocoTech eliminated the middlemen by partnering directly with coconut
farmers’ cooperatives through its community-business partnership approach. It invested
heavily in the capacity-building of individuals, families and local enterprises to ensure a
strong and dynamic supply chain. The company provided hands-on-training in
bioengineering and own market development to partner communities in addition to
continuous skills training workshops on twining and weaving in order to expand current
workforce. The company’s cocofiber village level processing contributed to the decline of
38
juvenile delinquency through employment of out-of-school-youth and empowerment of
women by giving them source of income.
Detailed training modules on the village level processing of the three NTCPEs seems
to be available from different NGAs, NGOs, academic institutions, private companies and
even on-line sources. However, actual skills training on the different stages of the value
chain appears to be lacking particularly on coconut harvesting, dehusking and sap tapping.
Unlike in India where various skills development program was initiated by the
Government in response to increasing shortage of skilled workers in the coconut sector
and the surging unemployment/underemployment problem (TK Jose, 2016). The Coconut
Development Board (CDB) had proposed three skill development program to the
Agricultural Sector Skill Council of India (ASCI): the Neera Technician Training, Friends
of Coconut Trees Training and the Coconut Cultivation and Nursery Management
Training. Approved by the National Occupational Standard (NOS) of India, these training
programs are now being implemented in partnership with Coconut Producers Company
(CPC) and academic institution with funding from NGOS. Neera Technicians (similar to
sap tappers in the Philippines) have enticed unemployed and underemployed particularly
the youth to undergo training and become technicians since employment is assured with
high compensation as it is partnered with Coconut Producers Companies. Furthermore,
Master Neera Technician trainings are also offered for those who aspire to become trainors.
Neera technicians are under classified “green collar job” giving them a pride and sense of
decency in their jobs. The Friends of Coconut Tree Training on the other hand, focused
not only on climbing palm trees with the help of climbing device but also on improving
the skill level in identifying pests and diseases with remedial measures. Graduates of this
training are called FoCT (Friends of Coconut Trees). As Dy conferred, “The training is an
innovative initiative of CDB which elevated the status of coconut tree climbing as an
occupation among youth”.
Moreover, the training programme for coconut cultivation includes the major aspects
of coconut cultivation such as identification of appropriate planting material, procurement
and treatment of planting material, land preparation, procedures for application of
fertilizers and micro nutrients, nursery management, weed management, technical
knowledge on identification of pests and diseases and understanding the infestation
symptoms, preventive and curative method, irrigation management, mixed/inter/multiple
cropping and other farm operations, harvesting and storage of coconuts and post-harvest
management. Dy cited that the production and distribution of quality planting material to
meet the demand of farmers especially hybrid seedlings in private sector require skilled
manpower. Skilled manpower are essential for profitable coconut farming, hence skills
development programme in coconut sector is of utmost importance.
According to Dy, R.J (2016), “ASCI provide certificates to trainees and the certificate
is recognized by the coconut industry since training is based on the National Occupational
Standards (NOS). As benchmark of good practice, NOS reflects the current desire of
industries to agree to national standards of competence, description of skills and common
terms among trainees, employers and training providers. It also specify the standards of
performance an individual must achieve when carrying out a function in the workplace,
together with the knowledge and understanding he/she needs to meet that standard
consistently”.
In the study of Suharto (undated), it was cited that the coconut industry is facing
problem on the availability of specific manual skills. In most coconut producing countries
particularly Indonesia, problem in recruiting tree climbers, dehuskers and deshellers is
being experienced. The same is true with India, where only 2% of their current workforce
is formally skilled hence, the Skill Development and Capacity Building Training programs
39
in coconut sector was introduced in 2012 which they called Friends of Coconut Tree
Training, (Indian Coconut Journal, 2016).
Similarly, capacity and skills development of farmers and farmer’s organizations or
nucleus-estates were also given emphasis in the coconut road map published by NAPC in
2016. It was clearly explained, that “farmers’ organizations should learn the value chain
orientation that will provide them important market information which will eventually
guide them of the current gaps and potential opportunities in the business environment
where they can add value to the coconut products”. To secure adequate supply of skilled
laborers for various agri-business enterprises like VCO, coconut sugar production and
coconut coir twining and weaving, appropriate trainings should be done in partnership with
TESDA since it has the technical capacity to develop training curriculum. However,
TESDA representative mentioned during the consultation workshop conducted for the
STED study that currently, no training modules for skills development for the coconut
sector had ever been made by the agency. However, in the Multi-Stakeholders’ Forum
conducted on October 21, 2019, the TESDA representative said that they are willing to
prepare a training manual or curriculum in tandem with PCA, DOLE and other experts.
Moreover, skills training on marketing, sales, business planning and inventory
management is likewise deemed necessary to ensure sustainability of nucleus-estate
enterprises.
Some studies, articles and literatures in the Philippines and other coconut producing
countries likewise tackled the issue of availability and need for skilled laborers in the three
NTCPEs and coconut industry in general. In the study of Suharto (1998), it was cited that
the coconut industry is facing problem on the availability of specific manual skills. In most
coconut producing countries particularly Indonesia, problem in recruiting tree climbers,
dehuskers and deshellers is being experienced. The same is true with India, where only 2%
of their current workforce is formally skilled hence, the Skill Development and Capacity
Building Training programs in coconut sector was introduced in 2012 which they called
Friends of Coconut Tree Training (Indian Coconut Journal, 2016).
Sugar production from coconut palm only involves traditional processing activity, but
labor intensive, requiring skilled tapper (Magat, 1998). Thampan (1998) also cited that
provision of training facilities for palm climbing, tapping and sap collection, assembling,
proper boiling and sugar manufacturing including packaging is necessary to make the
business profitable and sustainable. According to his study, palms when properly utilized
for tapping and sugar production will provide full time employment to one tapper and one
or two women members of the family and will generate 20-25% more income than when
they are maintained for nut production.
The coco coir products which enjoy both domestic and export demand could generate
employment and help augment income of farmers directly involved in the processing.
Skills needed for this particular product involves the manual soaking of husks, drying, coir
twining and weaving, balling/weighing and proper storage. Operation of decorticating and
twining machine also requires skills training (Dela Cruz, Pobre and Gabrido, 2002).
Meanwhile, specific skills development training program for the coconut sector was
carried out in India as featured in the Indian Coconut Journal February 2016 issue. In the
article of TK Jose entitled “Skills Development Opportunities-CPCs need to take a lead
role” mentioned that Various skills development program was initiated by the Government
of India in response to increasing shortage of skilled workers in the coconut sector and the
surging unemployment/underemployment problem. The Coconut Development Board
(CDB) had proposed three skill development programs to the Agricultural Sector Skill
Council of India (ASCI): the Neera Technician Training, Friends of Coconut Trees
Training and the Coconut Cultivation and Nursery Management Training.
40
Another study in the Philippines which touched on the essential skills needed in the
three NTCPEs is the Trade and Value Chains in Employment-Rich Activities
(TRAVERA) survey which was conducted to: (1) identify value the chain structure of non-
traditional coconut product exports (NTCPEs); (2) assess NTCPEs’ demand trends and
forecasts, constraints, and export related opportunities; (3) determine quantity and quality
of employment; and (4) recommend supporting functions, policies, rules and regulations.
It covered nine regions having a total sample of 100 SMEs and 71 farmers. The coconut
products covered by this study are virgin coconut oil (32%), coco coir/ peat (29%),
charcoal/ coco charcoal (24%), coconut sugar (19%), and other miscellaneous product
(36%). The study summarized the results into three groups: good performance, needs
improvement, and problem areas.
In terms of the skills and attitude of the current workers of the enterprises under good
performance, the result showed that about 70% of the enterprises rated their current
workers as “very good” and “excellent” in warehousing and shipping, quality control and
assurance, management responsibilities/taking a lead, taking initiative, production and
inventory management, measuring, grading and feeding batches of raw materials, logistics,
numeracy skills/ working with numbers, equipment operation and safety.
Meanwhile, the skills and attitude identified that needs improvement are
communication skills, literacy, food safety and handling, operating non-
computerized/non-automatic machinery, operating computerized/automatic machinery,
computer literacy, customer services skills, green skills, and foreign language skills. Under
the problem areas, the study showed the ease and difficulty of hiring workers. About 62%
of enterprises consider “recruiting high skilled workers” as difficult or very difficult. It is
followed by “recruiting medium skilled workers” (43%), and “recruiting low skilled
workers” (19%). Moreover, the difficulty in hiring regular workers are due to seasonality
of business(35%), significant increase in labor cost (25%), and business uncertainty (22%).
The study also cited the factors that may cause difficulty or challenges in providing
trainings to the workers. These are lack of available/competent skills trainers, difficulty in
selecting right people for training, lack of information on skills training/courses, low
quality of courses on offer/low quality of trainers, difficulty in funding the training.
At the farm level, the farmers’ main source of income is farming (97%). Around 28%
of them still rely on stock knowledge/traditional farming practices while others source their
knowledge on farming practices from government agencies/institutions, such as PCA
(25%), DA (10%) and/or LGU (9%). In terms of technology, the farmers still use the
variety since they started coconut farming (69%). Generally, dehusking is done manually
and majority (67%) of the farmers themselves do the labor. The cultural management
practices done by farmers are weeding (72%), fertilizing (54%), pest and disease control
(14%), and irrigating (4%). Eighty-six percent (86%) of the farmers “directly” hire or
recruit their laborers. The farm workers have been hired intermittently over a period of 7
years, on the average and there is no written contract or social security provision. More
than three-fourth (77%) of coconut production were sold by farmers for further processing
in the form of husked nuts (56%). While there are some who sold coconut by products like
husks (147%), sap (10%) and coco-sugar (4%). Traders are the usual buyers of produce
(72%).
41
Identified skills and institutional arrangements from the STED study
The succeeding section discusses the findings of the STED study on the skills needed
for the three NTCPEs which were identified through the conduct of KIIs and FGDs (as
summarized in Table 4).
A. Coco sugar
For the production of coco sugar, village-level scenarios were provided by the
cooperative in Alabat, Quezon. It was provided that PCA has given many training in regard
to the general methodologies and processing of coconut to supply the product. However,
the specifications of these trainings (i.e. purpose, frequency, participants, resource person,
etc.) were not provided during the interview. The production of coco sugar, much like
VCO and coir, also demands for skilled workers for all its operations, but the biggest chunk
of skills demand comes from the harvesting/tapping of coconut. On the other hand, PCA
CALABARZON stated that they provide entrepreneurial training for the NTCPEs.
Moreover, research and development training were also provided by PCA. These are
through the resource people tapped from DTI and ATI. However, the specific trainings
conducted were not disclosed and only suggested that these training would suffice any
necessary purpose. Additional information also provided that PCA Zamboanga Research
Center provides trainings for skills development for the three (3) NTCPEs, including best
practices. The site is also known for providing valuable information on general farm
maintenance, machine use, and maintenance of machines for coconut fiber processing.
However, trainings on deshelling and paring skills are not provided in the center.
Moreover, its location from most producers inhibits its popularity as a nationally-
acclaimed training center, thus, there is a need for introduction and/or producing manuals
from the said institution.
B. VCO
For Amazing Foods Corporation, current skills are met for the cold and manual
processes for VCO production which were acquired by the company’s owners through
trainings. The knowledge base was cascaded to the line operators to properly operate
machinery and for the required techniques in employing the cold process in producing the
NTCPE. In addition to trainings in handling machinery, the company also conducted
trainings on record-keeping and organic farming when the production of VCO was on its
high point some years back. These trainings were provided with the assistance of DTI.
This is one of the company’s initiative to develop village-level linkage in the community
where they operate. However, the current need of the company, related to skills, would be
the presence of skilled laborers for tapping – the initial process of production. It was stated
in the interview that most of the tappers in the area are akin to one another. There was also
a need for skilled labor for the line production involving traditional processes. In general,
VCO skills development at the production component, there should be focus on enhancing
capabilities for more efficient recovery. This also includes trainings and skills development
in various areas of operations including machinery handling, standardized production
procedures, and zero-waste recovery.
The interview with PCA revealed that the current skill sets for handling machinery is
generally lacking. Moreover, skills deficiency in the entire process of producing VCO is
basically caused by pirating of skilled workers. The solution found by the agency is to
conduct trainings for workers that will be included in pool and will ensure the supply of
skilled workers for companies involved in the production of VCO in the country. These
trainings will be in coordination with DOST in order for the skills development trainings
not to be solely provided by PCA. Coordination with TESDA is also crucial in providing
42
a pool of skilled workers for the industry but these trainings should be conducted at
different levels and based on the requirements (i.e. harvesting, handling of equipment, and
other processes) of a particular producer. Moreover, the agency also suggested that, while
there are promotional technologies and the accompanying trainings for these, the main
problem lies in the lack of workers that would engage in the industry. Other skills
development gaps provided during the interview was the provision of capacity for workers
to increase domestic utilization of VCO products. It was also mentioned that, while
investing on skills development, companies should also focus on providing general safety
for their workers.
The interview with UCAP was not able to elicit the necessary skills development for
VCO primarily because the agency’s roles are solely for coordination with member
producers. On the other hand, the workshop conducted involving Primex Coco Products,
CocoPlus Aquarian Development Corp., Pasciolco Agri Ventures, Greenlife, Alex & Lizel
(supplier of Greenlife), Quezon Federation and Union of Cooperatives, and Mamala I
Multi-Purpose Cooperative revealed that the necessary skills development for VCO
production is mostly during the first stages of production such as deshelling and paring of
coconut meat. It was inferred, that PCA does not provide the training and, ultimately, skills
required for the industry. In addition, most of the skills currently used by the participants
were self-developed. However, it was emphasized that there is a need for development of
negotiating skills in relation to promotion and marketing endeavors.
C. Coco coir
Based on the workshop discussions conducted with Tropical Prime Coir Corporation
and Pilipinas Eco-Fiber, skills development in the industry are generally provided to
capacitate workers to operate and troubleshoot machineries and equipment. However,
these trainings were from skilled workers and not derived from formal means because of
the general lack of service providers. It was also mentioned that DOST provided trainings
but respondents cannot give specific details. More specified skills development including
basic accounting, book-keeping, product development (e.g. fibersheet for footwear and
hanging cocopots), product designs, and benchmarking – participating in fairs for market
linkage/matching – were provided by DTI. Laborers of Pilipinas Eco-Fiber had undergone
trainings but these are related more to upholding safety measures within the work
environment which is conducted regularly by DOLE. Moreover, current skills in the
industry are largely on manual weaving and geonet-making with laborers working through
a 6.5 hour shift, particularly for Tropical Prime Coir Corporation. This firm also provides
trainings on twining and weaving to ensure that twiners and weavers abide by the quality
standard it had set. As to designing coco pots, bags, coco plant liners and other products
made of coco coir, private institutions hold trainings with the condition that products will
later on be sold to them. The seemingly dearth of training on coco coir production
specifically can be explained by the attribution of the industry not being a member of
UCAP.
With these, participants of the consultation workshop suggested that gaps in skills
revolve on the product innovation and, possibly, value-addition. Moreover, gaps identified
also included the lack of training for technologies that will improve cost-effectiveness and
quality in production. Skills gaps should also include capacitation for annual trainings on
safety (i.e. first aid) and driving in compliance with DOLE regulations. These gaps were
perceived to be filled by the different trainings provided by PCA, DTI, OPA, DOLE and
DOST. Moreover, it was also suggested that the DWSD’s beneficiaries, through their
Pantawid Pamilyang Pilipino Program (4Ps), should be tapped as well in these trainings
(coco coir twining and geo-net weaving) and proposed a mechanism that allowances
should be provided after a certain quota is reached.
43
At a village-level, particularly in Alabat, Quezon, coco coir trainings needed are on
the manual twining of coir to produce ropes. There was also a need for technical trainings
in manning mechanized equipment for twinning processes for more efficient production.
Lastly, skills development for all NTCPEs should focus on providing promotional
trainings - through product packaging enhancements and management capabilities -
including database and data management in order to facilitate general knowledge on the
different business operation needs in the production of NTCPEs.
44
Table 4. Skills for the production of the various NTCPEs from STED study.
Type of NTCPE
Areas for Skills Development/Agency Involved
Production Processing Marketing
Coco Sugar Current Skills
Research and development training – PCA provided by resource speakers from DTI and ATI
Current Skills
Entrepreneurial Skills – PCA (Region IV-A)
Skills Gap
Harvesting/Tapping – no agency involved; skills developed are through experience
VCO Current Skills
Organic Farming – DTI Skills Gap
Pooling of skilled workers – DOST as coordinated by PCA
Harvesting – TESDA
Deshelling – no particular agency involved; self-developed
Paring – no particular agency involved; self-developed
Current Skills
Machine-handing/operation – no particular agency involved; in-house training from VCO producers; proposed to be coordinated with TESDA
Skills Gap
Line production using traditional processes/ standardized procedures – no particular agency involved
Efficient recovery/Zero waste recovery – no particular agency involved
Machinery handing – PCA
Current Skills
Record-keeping – DTI
Technology and product promotion – DTI
Skills Gap
Negotiating skills – no particular agency involved
Skills Gap
Basic safety training – no particular agency involved
Coco Coir Current Skills
Twining and waving – developed by producer
Skills Gap
Cost-effectiveness and quality improvement – no particular agency involved
Manual twining for rope production – no particular agency involved
Technical training for machinery handling for cost-effective production – no particular agency involved
Current Skills
Basic accounting – DTI
Book-keeping – DTI
Product development – DTI
Product designs – DTI
Benchmarking – DTI Skills Gaps
Value-addition/product innovation – no particular agency involved
Product packaging enhancements and management capabilities - PCA, DTI, OPA, and DOST
Current Skills
Troubleshooting of machinery/equipment – no particular agency involved
Basic safety trainings – no particular agency involved
Design of coco pots, bags, coco plant liners, and other coir-based products – undisclosed private institutions
Skills Gap
Annual safety training – PCA, DTI, OPA, DOLE and DOST; in compliance with DOLE standards
Skills Gap
Provision of trainings from DOST in all aspects of production
Skills training for beneficiaries of 4Ps to be tapped in all aspects of production
Databasing and data management – PCA, DTI, OPA, and DOST
45
4 Summary, conclusions and policy implications
The study found that the NTCPEs included in the study have significant impacts on
the country’s global competitiveness. In addition, the three (3) NTCPEs were found to be
developed and motivated by the export market. Moreover, the lack of localized awareness
for the NTCPEs with the country’s current thrusts to boost localized consumption of the
NTCPEs. For the various years analyzed, it was found out that the production volumes and
values of the NTCPEs are fluctuating, but have generally positive AAGR in the last three
to five years.
For fervent analyses, the value chains and process flows of the NTCPEs were
divided into three components, namely: production, processing, and marketing. These
aspects were also crucial in providing the necessary analyses of the skills gaps present and
the development that are needed to be employed as well as the current capacities of firm-
and village-level enterprises included in the study. Further analyses of these showed
policy, institutional, and enterprise levels. Elicitation of the various gaps was conducted
through village-level FGDs, firm/agency-level KIIs, and informal interviews during the
2nd World Coconut Congress.
The perceived gaps in furthering NTCPEs production are found at the policy,
institutional and enterprise levels. At the policy level, there is no apparent or well-defined
monitoring of NTCPEs that will guide players about market movements and trends.
Meanwhile, trade in NTCPEs are largely unregulated which results in considerable price
volatility that may inevitably affect enterprise viability. There is also a dearth of awareness
among consumers and incentives on producers that impinge on domestic demand and
supply situations.
At the institutional level, there seems to be a confounding of the roles on skills
development for the production of NTCPEs among the various national government
agencies such as PCA, DOST, and DA. If and when there are initiatives they are not
coordinated, which are usually manifested in the training that are provided to stakeholders.
There is also room for improvement as far as creating awareness among the potential
consumers of NTCPEs.
At the enterprise level, there are localized paucity of skilled workers and standards
for acquired skills and product quality are wanting. Marketing skills are also found to be
meager which constrain the development of the NTCPEs. Safety and health training are
occasional and usually provided by firms that employ regular workers and in cases of
seasonal workers these are virtually nil.
46
Table 5. Policy, institutional, and enterprise level gaps in NTCPE production.
Gaps
1. Policy Level Existing statutes do not include monitoring of NTCPEs, thus, market trends are generally uncertain of, at best, lacking
Current trade laws do not protect the prices of NTCPEs causing fluctuations to values
Trade policies do not dictate volume of production
Domestic markets are generally lacking because of insufficient awareness
Lack of mechanisms in incentivizing participation to production of NTCPEs similar with other government thrusts
2. Institutional Level No clear/overlap of roles for institutions on the skills development for the production of NTCPEs
PCA’s roles are principal to the production of NTCPEs but these roles are spread to thinly because of the other commodity-derivative from coconut
DOST’s roles are not harmonized for all NTCPEs
DA’s initiatives are not very clear for NTCPEs
Initiatives to build awareness are generally lacking
Agencies roles are often too many and the trainings they provide are redundant and confusing
A centralized agency for skills development and capacity building is absent
Trainings provided are often unsustainable because marketing capabilities are generally absent
3. Enterprise Level Skills for production are generally lacking and often lead to lack of skilled workers
Cross-cutting gaps are mostly within the production stages of the value chain
Standardized procedures are yet to be established
Value-addition is often overlooked because of the need to meet volume requirements
Marketing skills are often too sparse, if not sustainable
Safety trainings are intermittent
Development of products are often limited by unclear markets
Aside from the skills development gaps, one of the major problems deterring
production of the NTCPs is the seasonality of labor demand. Production of NTCPEs are
also done in small and disaggregated farm parcels which lead to low volumes primarily
because of the low productivity per tree. Processing of NTCPEs are unstandardized
because of considerable disaggregation while quality of products is greatly varied.
4.1 Recommended strategies to reduce skills gaps
and seasonality of labor
4.1.1 Strategies to reduce skills gaps
The roles of various government agencies should be highlighted in order to address
skills gaps in the different components of NTCPEs. In the production component, DA,
DAR, DOLE, PCA, TESDA, and DEPED were identified to augment skills gap for
production activities of NTCPEs such as tapping, harvesting, deshelling and dehusking.
These agencies are, in particular, should collaborate to provide for the basic necessities of
the sector; with PCA as the primary agency for coconut. Technical, input, and financial
assistance are provided by PCA in coordination with DA and DAR. These agencies can
also provide farm machineries to established cooperatives or farmers’ associations where
farmers are already affiliated with. Primary skills development was recommended by
respondents that should be honed in schools where DEPED and TESDA should be on the
frontline in making the future generations appreciate the value of NTCPEs. Meanwhile,
DOLE’s roles are primarily to monitor and ensure employees legal rights are properly
47
implemented (e.g. working hours, wages received, overtime pay, etc.) and safety standards
are kept (e.g. protective working gears, proper ventilation, etc.). It likewise provides
livelihood assistance for registered organizations as mentioned by DOLE in the conducted
KIIs. Assistance from DOLE can be availed of upon submission of a proposal.
For processing of coconut into NTCPEs, DOST, DA-ATI, and PCA are the
collaborating agencies. DOST’s capacities to provide for appropriate protocols for
NTCPEs will be crucial for standardization of products. On the other hand, DA-ATI can
also participate and can be tapped for the necessary trainings and skills development
needed for any agricultural-related capability provision or enhancement. PCA’s roles also
include provision of machinery and equipment that can enhance the recovery ratings of the
NTCPEs. Trainings on machine operations on grating, extraction, filtering, decortication,
twining and weaving can also be spearheaded by PCA in collaboration with TESDA and
private agencies. Moreover, development of more efficient recovery and production of
NTCPEs should also be ensured to lower costs of mechanization and, ultimately, NTCPEs.
To further develop processes and operational management systems, experienced
practitioners can also be tapped as resource persons in the skills development activities.
All these can be integrated by the NTCPEs as training manuals to ensure that standards are
met and all processes are within allowable limits.
On the other hand, aside from PCA, DTI should lead the frontline for marketing of
NTCPEs at local and international markets. Further appreciation of NTCPEs will be
possible if these are all packaged and labelled based on prevalent certification standards
for enhanced global competitiveness. Moreover, the roles of CDA should also be
streamlined to promote a cooperative that will oversee the production of NTCPEs at a
village-level but with the capacity to perform as a firm. Current mechanisms of DTI and
LGUs also integrate the creation of One Town One Product (OTOP), inclusion of package
development, and package of technologies for replication. All of these marketing
mechanism should be provided in a publication pertinent to the best practices of the
NTCPEs which may also be derived from current producers’ best practices. Value-addition
and promotion of NTCPEs are essential to improve its market. Hence, the importance of
research, development, and extension activities should also be highlighted as cross-
sectional impacts from these are foreseen to affect the continuity of an integrated
production unit.
48
Table 6. Production, process, and marketing strategies for skills development of NTCPEs
Major Component Technical Aspect/Non-Sales Business Aspect/Sales
Skills Development Production: - Tapping - Harvesting - Deshelling - Dehusking
Process: - Machine operations:
1. Grating 2. Extraction 3. Filtering 4. Decortication 5. Twining 6. Weaving 7. Cooking (i.e. for coco sugar
and VCO production) - Creation of manuals of operation
Marketing: - Record-keeping - Promotion - Inventory - Interpersonal communication - Development of best practices
Provision of Skills Development
Production: - DA - DAR - DOLE - PCA - TESDA - DEPED
Process: - DOST (ITDI) - PCA - DA (ATI) - Field practitioners and producers
(e.g. Greenlife, Annato Production)
Marketing: - DOST (ITDI) - DTI (OTOP integration) - LGUs - CDA - Third-party certification agencies
Market Establishment
Domestic: - VCO as food and not just
supplement - Market research for product
diversification of coco coir other than for textiles
- Introduction of coco peat for organic agriculture
- Introduction of coco sugar as sweetener replacement
- Production of certified products - Market monitoring for VCO, coco
coir, and coco sugar Global - Value-addition to coir other than
textiles to increase global competitiveness
- Market research to minimize cost of VCO to be more globally competitive
- Streamlining coco sugar and serious business promotion
- Production of certified products - Market monitoring for VCO,
coco coir, and coco sugar
Policy level
Eradication of skills gap relies on cross-cutting social issues of adequacy of economic
gains from the sector and by providing active financing mechanisms, especially for village-
level production (Table 7). Measures of changing perceptions should also be viewed as
major driving force in eliminating skills gap because these will eliminate the lack of skilled
workers because of their short-term view of economic gains. This is proposed to be
included in the agencies’ IEC and coordination activities. In relation to this, it is also
proposed that skills gaps should be identified in all sectors and stakeholders to produce a
manual of good practices that can be replicated. This also involved harmonization of all
activities to learn from past failures and determines modalities of success. Strategies
49
should be able to cover the development of specific curricula or training programs, labor
market policies that improve job matching, as well as the overall incentive system (taxes,
subsidies, etc.) for innovation and skill formation, ways to enhance coherence between
trade, investment, labor market and skills policies. All of these can be incorporated and
can be done through more specific policies that can be provided for the NTCPEs.
Institutional level
At present, skills gaps in the production of the various NTCPEs currently point to the
lack of training for different components in the value chains. In the enabling environment,
it is proposed that government agencies such as PCA, DOST, and ATI should be more
proactive in providing the necessary skills training for production of coco sugar, VCO, and
coco coir beyond peculiar firms that were reached by these agencies. The proactive
provision should be more specific for the various needs of the different producers in terms
of enhancing capacities for cost-effective production technologies and methodologies. It
can also be suggested that enhancement of relevance of training and educational
institutions for the sector’s needs, for example by improving dialogue with employers. In
addition, the creation or improvement of permanent institutional arrangements for skills
anticipation and skills monitoring might be recommended.
In order to address these problems and concerns, it is recommended that the social
and economic benefits should be established by the government through participatory
means which is the current thrust of PCA. Participatory mechanisms may be done through
motivation and organization of communities into cooperatives which, in turn, secures
livelihood and social bonds, in general. Various NGAs provide different skills
development programs, such as in the case of DA and DAR, in organized communities
and, specifically, with registered cooperatives.
In addition, concerned institutions and agencies should also focus on creating
opportunities for capacity enhancement of producers and skills development of workers
by providing cost-efficient machineries/equipment and providing trainings based on the
needs of each component in the value chain. Several salient recommendations, including
a registry of trained skilled workers in coordination with DOST and TESDA, were
provided. A list of registered and trained skilled workers should be kept to provide a choice
for firms to avail of skilled labor. This means that through the hub business model, the
workers are to work in all parcels as per the schedule to be provided by the hub. It is very
feasible and creates equal opportunities for laborers to be exposed in the various aspects
of the value chains. The farmers will have: 1) continuous employment that addresses
seasonality problems; 2) they will be exposed in a more holistic approach of far
management; and 3) be direct beneficiaries of government-aided projects and programs
(i.e. provision of inputs and capital) which they need.
These should also go beyond providing manual labor skills enhancement but should
be more holistic in nature and should ensure that all aspects of business development are
tackled. However, the holistic approach must also be adaptable with varying needs of the
entities needing skills development because current trainings and skills development
initiatives of PCA are highly generalized in nature. Moreover, while the trainings are
needs-based, experts’ pool for technology and knowledge transfers must also be
established. Information and education campaigns should also be conducted at varying
levels so as to increase awareness and facilitate change of attitudes of producers and
consumers alike. This is to address the provided current perception of NTCPE producers
that work force is concerned on day-to-day monetary gains and not on a long-term and
sustainable mindset.
50
Enterprise level
For the production aspect, skills gaps are more attributed to the lack of skilled workers
for tapping and harvesting in VCO and coco sugar production, while lack of skilled twiners
is apparent for coco coir. This was addressed and proposed by the various participants in
the information elicitation activities that pooling of skilled workers should be
implemented. It was indicated that handling of machineries is a necessity in all NTCPEs
and require constant trainings for operating equipment. Moreover, skills development for
manual processes in VCO production was highlighted as a means to close skills gaps for
the sector. This can only be achieved by harmonizing the roles of identified agencies and
including the support of the private sector for skills development where gaps in service
provision are present. This was indicative of a call of building government-private sector
partnerships in providing the much needed trainings for the production of NTCPEs.
Critical factors for skills development, such as in-house training, labor turnover, and
mechanisms for social dialogue on training needs and delivery are considered and
improvements are necessary.
Table 7. Summary of recommendations to address skills gaps for NTCPEs.
Recommendations
1. Policy Level Provisions of active financing mechanisms to promote greater participation at a village-level
Changing perceptions to deviate from “cash-crop mentality”
Promotion and awareness building through well-structured modalities
Formulation of manuals with well-defined standards
Strategies should be able to cover the development of specific curricula or training programs, labour market policies that improve job matching, as well as the overall incentive system (taxes, subsidies, etc.) for innovation and skill formation, ways to enhance coherence between trade, investment, labour market and skills policies
2. Institutional Level Government agencies such as PCA, DOST, and ATI should be more proactive in providing the necessary skills training for production of coco sugar, VCO, and coco coir beyond peculiar firms that were reached by these agencies
Various needs of the different producers in terms of enhancing capacities for cost-effective production technologies and methodologies
Enhancement of relevance of training and educational institutions for the sector’s needs, for example by improving dialogue with employers
Creation or improvement of permanent institutional arrangements for skills anticipation and skills governance might be recommended.
Security of social and economic safety nets should be established by the government through participatory means which is the current thrust of PCA
Concerned institutions and agencies should also focus on creating opportunities for capacity enhancement of producers and skills development of workers by providing cost-efficient machineries/equipment
Pooling of skilled workers in coordination with DOST and TESDA
Trainings should be needs-based, experts’ pool for technology and knowledge transfers must also be established
3. Enterprise Level Addressing the production gaps is pivotal for improvement of enterprises
Handling of machineries is a necessity in all NTCPEs and require constant trainings for operating equipment
Addressing skills development for manual processes
Building government-private sector partnerships in providing the much needed trainings for the production of NTCPEs
Critical factors for skills development, such as in-house training, labor turnover, and mechanisms for social dialogue on training needs and delivery
51
Aside from these, the invaluable information elicited from the different sectors
interviewed may call for the following recommendations. Coverage of the study in other
major coconut-producing regions to better understand and determine the deviation of
experiences and skills gaps and capability enhancements aside from Region IV-A. These
may also provide valuable strategies and recommendations that can be compiled because
these are generally site-specific.
4.1.2 Hub integration business model for the production
of coco sugar, VCO and coco coir at a Village-Level
Setting
To address the problem of seasonality of labor, low production and disaggregated
farm parcels, and unstandardized processing of NTCPEs, STED is recommending the
setting up the Hub Integration Business Model. Through the Model, skilled laborers will
be employed continuously for six days a week, throughout the year. In order to address
these problems, integrated production of NTCPEs can be viewed as a suitable approach.
Benefitting from economies of scale and economies of scope are primary. The integration
of these farms into hubs provides the mechanism for sustainability of the industries
surrounding NTCPEs. Moreover, the integration of parcels into a single hub ensures that
skills development and training provision are centralized and better determined.
Various activities conducted for the STED project showed that current production of
NTCPEs in the areas visited is done in small and disaggregated farm parcels. Most of these
farms also produce one type of NTCPE. These conditions lead to low volumes primarily
because of the low tree per unit area ratios and ‘one-type production’ schemes in these
small farms. Moreover, the processes involved in the conversion of raw coconut to the
NTCPEs are greatly unstandardized because of this considerable disaggregation. In turn,
the quality of products is greatly varied. On the other hand, disaggregation may also lead
to the competition for skilled workers. It was previously reported that, while manpower
requirements are present, skilled workers in one farm can be “pirated” by another in order
to produce their target volumes.
In order to address these problems, integrated production of NTCPEs can be viewed
as a suitable approach. Benefitting from economies of scale and economies of scope are
primary. The integration of these farms into hubs provides the mechanism for
sustainability of the industries surrounding NTCPEs. Moreover, the integration of parcels
into a single hub ensures that skills development and training provision are centralized and
better determined. This is in cognizance of the capital intensive nature of the production
of the NTCPEs.
A. General mechanism for integration
Organizing different producers of NTCPEs into one hub may address this because of
utilizing a singular facility where all equipment are present. This facility may be provided
through budgetary appropriations of the LGUs and NGAs related to NTCPEs. On the other
hand, participating farmers are provided with free inputs and specialized trainings which
will cater to their current and potential needs. Other incentivizing modalities may be
created by the participating LGUs and NGAs. At present, national policies directly for
incentivizing production of NTCPEs are currently absent because of their relatively lower
market and economic shares to the country’s GDP.
Many benefits may be derived when these parcels are integrated. For one, expenses
for hauling may also be reduced by providing single service line for all parcels. Moreover,
52
integrated production can also ensure the quality of product because a single standard will
be utilized for all processes. Skilled workers can also be pooled in an integrated approach
to avoid competition. This will also be beneficial in avoiding redundant training and
creating equal opportunities for capacity and skills development for workers in the locality.
Integration may also be a solution for sustainable harvest of coconut for VCO, coco coir,
and coco sugar because the number of nuts collected may be monitored. With these, an
integrated business model for the production of NTCPEs at a village-level setting is
proposed based on the various elicitation activities conducted.
The proposed business model for NTCPEs takes into consideration these factors and
integration encompasses a design area of 50 hectares. Moreover, this area will be divided
into 30 hectares for VCO and coco coir production while the remaining 20 hectares will
be devoted for the production of coco sugar. The first two NTCPEs will be integrated in
one area because de-husking activities will recover coir while the coco meat will be utilized
for the production of VCO. Based on estimates, the 30-hectare plot for the integrated VCO-
coir production area may produce 416 kilograms or 416 nuts for a 20-day working period
or at least 27 to 34 liters of VCO. This further translates to PhP 6.49 to PhP 8.17 per
coconut equivalent from a presumed PhP 100/L sold to intermediary processor and
revenues of PhP 2,700 to PhP 3,400. On the other hand, a segregated area for coco sugar
production is devoted because of the difference in source of raw material (i.e. coconut sap).
The estimated annual production per tree is 50 nuts per tree and may have a density of 100
trees per hectare depending on the parcel (i.e. ~5,000 nuts per year per hectare or ~250,000
nuts per year in the proposed 50-hectare pilot site). This level of operation will be viable
only if the VCO production is not done daily. Otherwise, it is recommended that the pilot
area be raised to provide the economies of scale to cover the cost of capital equipment and
maximizing the labor cost of workers.
In determining the production capacity of the proposed hub, it is estimated that the
average number 48 to 54 nuts per tree (PCA, undated). With this value range, 48,000 to
54,000 nuts can be produced in the proposed hub. These nuts will be utilized for the
simultaneous production of VCO and coco coir per year. Although the exact volume per
weight of raw coconut is not possible to be estimated because of the obvious variation for
each harvest, a practice of the village supplier of Greenlife – a producer of VCO – showed
that recovery efficiency is rated at 6-7% from 250 kg of raw coconut to 15-18 kg of VCO
but daily operations of the company produces three (3) to four (4) tons per day for an eight-
hour operation (i.e. 50-72 kg of VCO following the efficiency rate). On the other hand,
based on the interview with Tropical Prime – a producer of geonets, biologs, and coco
peat, production of 7-10 ropes with the length of 12 meters can be produced from one (1)
kilogram of fiber. In turn, a roll of geonet with the size of 1 x 25 m can be produced by
weaving 180 ropes. For the coco sugar, production may vary based on the availability of
inflorescence per tree. But, based on the interview with Annato Farm, coco vinegar
produced in a week’s time was estimated to be 500 kg for vinegar per day and 600 kg of
syrup per week (~100 kg per day; 3 days of processing).
For each product, skills requirements elicited mainly depend on manual labor. For
VCO, the skills requirement are for the efficiency of splitters, graters, extractor machine
operators, harvesters, personnel to filter VCO from the density suspension, cook, and
dishwasher. The interview of the village-level supplier for Greenlife revealed that at least
nine (9) on-call laborers (i.e. one for each process except for two personnel needed for
grating and machine operations) are needed for the production line. They are also
compensated differently given by the table below.
53
Table 8. Compensation for laborers in the VCO production line.
Activity Compensation (PhP)
Splitting 155/ton
Grating 600/ton
Extraction 155/ton
Harvesting 155/ton
Filtering 125/ton
Cooking 125/ton
Dishwashing 300/day
It was reported that the area has high labor supply and that their peak season operation
is within September to December. During this peak season, daily operations ensue.
Training these workers require increasing their efficiency to produce the required volume
faster and increase recovery rate for VCO. Capital outlay for operations of this scale was
estimated by Greenlife to be PhP 500,000 as initial investment. This investment includes
an extractor which costs PhP 250,000 for brand new and PhP 160,000 for secondhand.
Moreover, the process for recovery of VCO for this investment is done manually as
centrifuge costs around PhP 5 million based on the interview with PCA-Region IV-B. This
is on top of the annual certification process which costs around PhP 350,000. Most of the
in-house operations are women because of the delicate process of extraction but most
collection and harvesting processes are generally dominated by men.
For coco coir, primary operations rely on a village coordinator for Tropical Prime.
This coordinator is responsible for the distribution of fiber supplies for the twiners. As
previously discussed, twining of coco coir relies on a decortication which is done by an
external source. Each twiner is paid PhP 2.00 per rope. In the production of geonets, two
(2) workers are needed per bed. Information elicited showed that men are more efficient
and can produce a roll in two (2) hours or at least four (4) rolls for an eight-hour period.
They are compensated with PhP 250 per roll or a maximum of PhP 1,000 per day.
On the other hand, sap production starts in September. Based on the interview with
Annato Farm, sap vinegar and coco syrup are primarily produced and their production
volumes are generally dependent on existing orders. This set-up is followed because of the
four-hour window period for sap collection before being spoiled. Aside from this
collection process, coconut syrup collected twice in a 12-hour period is used to produce
aminos, coco jam, and balsamic vinegar which is darker in coloration compared to that
used in coco sugar production. Skills requirement for the production line still greatly
depends on the expertise of tappers. Lack or absence of these tappers would mean that the
quality of syrup produced becomes invariable and can cause serious delays in the
operations. The current production of the company relies on six (6) tappers, two (2) cooks,
and one (1) maintenance personnel. Compensation of these laborers depends on the type
of product produced where: PhP 5.00 for tuba; PhP 7.00 for syrup; and PhP 8.00 for sugar.
Bottling is also done in the area but is dependent on the product’s quality. As a supplier of
Greenlife, the end-user utilizes under-quality produce for other products. While the gender
distribution of the laborers for production is not provided, it is assumed that men dominate
the production because of the traditional skills training for men as tappers. All of these
activities will assure that the hub will be conducive and safe for all workers.
Table 9 presents the estimated labor requirement at the farm and village levels. At the
farm level, a total of five (5) persons will be employed in a contiguous 30-hectare coconut
area. They will be employed for 24 days/moth, harvesting 1,500 nuts/day. At the village
level, nine (9) workers will be hired to multi-task for the production of VCO and coir/peat.
Just like the farm laborers, they will be employed for 24 days, half of which will be on
VCO production and half for coir/peat preparation and making of twines and weaving of
54
geonets. It is worth noting that the 14 people who will be hired will have regular
employment throughout the month.
For coco sugar production, 40 tappers will be needed to cover the entire 20 hectare
and another 40 cooks that will convert the sap collected will also be needed at the
farm/village level. Meanwhile, at the business hub where the syrup will be processed into
granulated sugar, another 20 laborers will be needed to cook the syrup into granulated
sugar and do the packaging of coco sugar. A total of 100 laborers will be regularly
employed by this industry.
Table 9. Labor requirements for the Integrated Business Model for 50 –hectare sample cluster.
Product Labor Requirement at the Farm and Village Level
Number and Type of Laborers Number of days employed
Integrated VCO & coco-coir
VCO & coco-coir Farm level 1 Harvester 1 Nuts gatherer 1 Hauler 2 Dehusker Village Level Processing VCO @ 3tons/day =1500 nuts 1 Splitter 2 Grater 2 Extractor 1 Harvester 1 Filterer 1 Cook 1 Dishwasher Coir/Peat 1 Husk collector/soaker 1 Decorticator 1 Baler/Peat collector 4 Twiners 2 Geo-net weavers
1500/nuts/day @ 24 days/mo 12 days/mo @8hr/day 12 days/mo @8hr/day Note: Similar set of manpower will be utilized for the processing of VCO and Coir/peat
Coco sugar
Village Level Processing 40 Tapper/sap collector 40 Cooks – sap to syrup Processing at the Business Hub 20 Cooks – syrup to granulated sugar
24 days/mo Assumptions: A total of 2,000 trees in 20 hectare; 50 trees per tapper per day;1 cook per hectare of tree per day
Recruitment of laborers for this enterprise will be very crucial. Hence, to secure
adequate supply of skilled laborers an appropriate training curriculum should be
developed. Attempts to come up with cost estimates for skills development encountered
difficulties since modules for the recommended trainings have not yet been prepared or
offered by service providers, particularly government agencies such as TESDA, DOLE,
DTI, DA and DAR. Nevertheless, TESDA expressed its willingness to develop the
appropriate modules during the stakeholders’ forum. The proposed framework of the
sample integrated hub is provided in Figure 7.
55
Figure 15. Integration model for a 50-hectare sample cluster
As shown in the figure, individual farm parcels in the 50-hectare cluster are generally
divided into coco coir-VCO and coco sugar production areas. The model is simplified to
facilitate presentation. Coco coir and VCO are lumped together to maximize the input
utilization. This meant that the coir from the nuts to be used for VCO are recovered in the
dehusking center. From this point, the coir removed are delivered to twining center, where
decortication is also done, to produce ropes that are then weaved. The resulting ‘processed’
inputs are then delivered to the business and marketing hub where these are utilized by a
coir and peat processor. On the other hand, coco meat recovered from the dehusking center
are then primarily processed through crude fermentation to derive raw VCO. The
intermediate product is then delivered to the hub to be used by a VCO processor. Lastly,
peculiarity of the timeframe needed to recover syrup to be used for the production of coco
sugar is recognized by the model, thus, conversion from sap will be done at a farm level.
This intermediate product is then to be brought to the hub to be processed into coco sugar
by an integrating processor. Table 10 presents the capabilities at varying levels, actors, and
intervening agencies in the proposed integrated business hub model.
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Table 10. Integrated business model for a 50-hectare sample cluster for identified skills.
Product Actors Product Level Agency and their
trainings/interventions
Coconut Farmers Raw coconut Individual (Village) PCA – fertilizers and HYV’s TESDA/DOLE – core competencies DEPED – awareness building
Dehusking Integrator
Dehusked coconut
Village/coop PCA – mechanization LGU – dehusking
Coco coir Twiners Coir ropes Individual/ small-group (Village)
PCA/DAR/PLGU/DTI/DOST- mechanization
Weavers Geo net Individual/ small-group (Village)
PCA/DAR/PLGU/DTI/DOST - mechanization
Centralized Coir (and peat) manufacturer (centralized)
Coir (peat and bio-logs, and other related products)
Business/ Company/ Corporation
Tropical Prime/PCA– coir and derivatives processing DTI – marketing
VCO VCO Primary Processor
Raw fermented VCO
Individual/ small-group (Village)
DOST/PCA/CDA– mechanization and harvesting
Centralized VCO Secondary Processor (and Quality control)
Standardized VCO (and other VCO products)
Business/ Company/ Corporation
DTI/DOST/ATI/Greenlife/ PCA/CDA/3rd party Certifying Body– processing and marketing
Cocosugar Farmers (clustered)
Raw syrup (for sugar and other related cocosyrup)
Individual (Village) PCA/DOST – tapping, mechanization, and processing
Centralized Cocosugar Processor
Cocosugar (and other related products)
Business/ Company/ Corporation
DOST/ATI/DTI/CDA/Annato/3rd Party Certifying Body – product development and marketing
B. Linkages and institutional development for hub integration
At the core of these proposed hubs, government agencies play a significant role in
providing support mechanisms in the different components of the NTCPEs. Collaboration
among agencies such as DA, DAR, DOLE, DOST, PCA, ATI, TESDA and DEPED is
deemed important to support skills development and capacity building of the business
enterprise. Improving access to financial and non-financial services is also essential to be
able to invest in technological upgrading as well as in human capital. PCA together with
DA and DAR can provide technical and financial assistance through provision of farm
machineries while ATI, TESDA and DEPED can be tapped to provide trainings on primary
skills development and other farm related activities. On the other hand, DOST can provide
protocols for product standardization. Moreover, in terms of assistance to market-oriented
development services, such as technical and managerial assistance and market linkaging,
DTI should be the lead to better market the NTCPEs to both local and international
markets.
57
5 Constraints and problems encountered in
implementing the STED project
Major constraints and problems encountered during the implementation of the project
revolved primarily on the procedure of elicitation and quality of available data. In terms of
the procedure of elicitation, the main problem lies within the coordination of the workshop
to the various companies and agencies concerned in the production of the NTCPEs. The
lack of lead time to invite them significantly affected the data elicitation wherein some
important details for each NCTPE was not gathered thoroughly. In addition, there had been
some instances that they are also not available for interview. This hampered the conduct
of KIIs and FGDs because the team were unable to find common schedule to visit as many
agencies and/or companies as possible.
On the other hand, effectively reporting the state of the skills development and needs
for the NTCPEs were also inhibited by the lack of available data. The references used and
considered are those with skills enhancement and development. To date, there is a limited
number of studies and/or data which focused primarily on skills development of the
NTCPEs, aside from this study. Thus, it was really challenging to search for published
articles and/or any sufficient literature with specified skills development needs. Presently,
there is no published material that purposively enumerates or collates all necessary skills
for the different stages or components in the production of coco sugar, VCO, and coco
coir. This made comparison, let alone the identification, of current and required skills very
difficult.
58
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